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Liverpool City Region Strategic Housing & Employment Land Market Assessment (SHELMA)

Consultation Draft Report

January 2017

Prepared by

GL Hearn280 High HolbornLondon WC1V 7EE

T +44 (0)20 7851 4900glhearn.com

Liverpool City Region Strategic Housing & Employment Land Market Assessment (SHELMA) Consultation Draft Report, January 2017

Contents

Section Page

1 INTRODUCTION 4

2 CURRENT POLICY FRAMEWORK 7

3 HOUSING AND FUNCTIONAL ECONOMIC MARKET AREAS 15

4 LIVERPOOL CITY REGION’S ECONOMY 22

5 COMMERCIAL PROPERTY MARKET 52

6 FUTURE ECONOMIC GROWTH POTENTIAL 72

7 TREND-BASED DEMOGRAPHIC PROJECTIONS 82

8 HOUSING AND ECONOMIC GROWTH 102

9 AFFORDABILITY AND HOUSING MARKET SIGNALS 111

10 SPECIALIST HOUSING NEEDS 131

11 NEED FOR OFFICE AND INDUSTRIAL LAND 147

12 NEED FOR LARGE SCALE B8 WAREHOUSING DEVELOPMENT 160

13 NEED FOR OTHER SPECIALIST EMPLOYMENT LAND 169

14 DRAFT CONCLUSIONS 175

GL Hearn Page 2 of 193/tt/file_convert/5b4d2b227f8b9a641a8b579d/document.docx

Liverpool City Region Strategic Housing & Employment Land Market Assessment (SHELMA)Consultation Draft Report, National Economic Conditions

Quality Standards Control

The signatories below verify that this document has been prepared in accordance with our quality control

requirements. These procedures do not affect the content and views expressed by the originator.

This document must only be treated as a draft unless it is has been signed by the Originators and approved

by a Business or Associate Director.

DATE ORIGINATORS APPROVEDJanuary 2017 Aled Barcroft, Senior Planner Nick Ireland

Nick Ireland, Planning Director Planning DirectorJustin Gardner, JGC

Limitations

This document has been prepared for the stated objective and should not be used for any other purpose

without the prior written authority of GL Hearn; we accept no responsibility or liability for the consequences of

this document being used for a purpose other than for which it was commissioned.



1 INTRODUCTION

1.1 The local planning authorities within the Liverpool City Region have commissioned GL Hearn to

prepare a Strategic Housing & Employment Land Market Assessment (SHELMA) for the City

Region to provide a consistent joint evidence base for housing and employment land needs over

the period to 2037.

Study Context and Objectives

1.2 The Assessment is intended to provide an evidence base to inform the preparation of a statutory

City Region Spatial Framework, which the Liverpool City Region Combined Authority Housing and

Spatial Planning Board is charged with preparing. It will also provide an evidence base supporting

the preparation of local plans by individual authorities within the City Region.

1.3 The scope of work is focused on considering issues related to:

Future economic performance, and the scale of growth in jobs to 2037; The objectively assessed need (OAN) for housing; Need for B-class employment land.

1.4 It is intended to provide an integrated evidence base on housing and employment needs, which is

consistent with national policy and guidance, is clear and transparent, and which can support future

planning policy development. Specific requirements of the consultancy brief included:

Review and identify the Housing Market Area (HMA) and Functional Economic Market Area (FEMA) geographies affecting the Liverpool City Region Authorities;

Identify the Objectively Assessed Need (OAN) for housing over the period 2012 - 2037 across the City Region and set out an approach to distribute the City Region OAN to each of the local authorities;

Consider the scale and distribution of economic growth across the City Region, taking account of past trends and baseline forecasts; as well as committed investment projects which may influence the scale/ distribution of growth;

Model the need for employment land across the City Region, taking account of the economic data and commercial market dynamics and the expansion of the Port of Liverpool; providing outputs on employment land needs at a local authority level where relevant based on demand-side considerations.

1.5 In terms of housing need, the focus of the assessment is on considering the overall need for

housing. Local housing needs / market assessments provide supplementary, locally specific

evidence on the need for different types of homes.

1.6 On economics, the core outputs include the net growth in employment (jobs), across the City

Region and in individual local authorities; as well as an assessment of the need for B-class

employment land. In considering employment land provision, particular consideration is given to the



future strategic need for warehouse / distribution floorspace across the FEMA taking account of

local demand drivers and the growth of the Port of Liverpool.

1.7 A separate Strategic Sites Assessment has been produced by GL Hearn alongside this SHELMA

which includes a review of sites capable of accommodating B8 warehouse/ distribution units of over

9,290 sq m together with candidate sites for future allocation. The report does not therefore assess

all employment sites within the sub-region and this SHELMA should thus be read alongside up-to-

date individual local authority employment land reviews.

1.8 Decisions regarding the allocation of specific employment sites are policy issues, which need to

draw together evidence regarding need and market attractiveness, which are considered herein,

alongside other issues including Green Belt and transport impacts, together with infrastructure

provision.

Study Preparation Process

1.9 The SHELMA has been prepared by a consultancy team lead by GL Hearn, supported by Justin

Gardner Consulting (JGC) in assessing housing need; and MDS Transmodal in assessing future

requirements for large B8 floorspace.

1.10 Alongside the preparation of the SHELMA, the Liverpool City Region LEP has commissioned

Oxford Economics (OE) to prepare econometric forecasts for future economic performance. This

includes a Baseline Scenario based on OE’s baseline econometric forecast, and a Growth Scenario

which draws upon additional data provided by each of the local authorities regarding

transformational developments which will influence future economic growth but which may not be

reflected in the Baseline forecast. The consultancy teams, LEP, and local authorities have liaised

with one another in developing economic forecasts which can provide a consistent basis for policy

development and have informed this report.

1.11 The SHELMA’s preparation has been supported by a Steering Group comprising representatives of

the authorities within the Liverpool City Region, West Lancashire Borough Council, together with the

Liverpool City Region Local Enterprise Partnership (LEP) and Merseytravel.

1.12 Stakeholder engagement has been (and continues to be) an important part of the process of

developing the SHELMA. This has included engagement with a range of stakeholders on the

proposed methodology, and initial work to define the housing market and functional economic

market areas. This Consultation Draft Report is published to support further engagement and

feedback from stakeholders prior to the finalisation of the SHELMA evidence base.



Report Structure

1.13 The remainder of the report is structured as follows:

Section 2: Current policy framework; Section 3: Housing & functional economic market areas; Section 4: Liverpool City Region’s economy; Section 5: Commercial property market; Section 6: Future economic growth potential; Section 7: Demographic trends and projections; Section 8: Housing and jobs interaction; Section 9: Market signals; Section 10: Specialist housing needs; Section 11: Need for office and industrial land; Section 12: Need for large-scale B8 development; Section 13: Need for other specialist employment land; Section 14: Draft Conclusions.



2 CURRENT POLICY FRAMEWORK

National Planning Policy

2.1 The National Planning Policy Framework (CLG, 2012) (referred to within this document as ‘the

Framework’ or as the NPPF) sets out a presumption in favour of sustainable development (Para

14). For plan making this means that local plans should meet objectively assessed development

needs, with sufficient flexibility to respond to rapid change, unless the adverse impacts of doing so

would significantly or demonstrably outweigh the benefits or policies within the Framework indicate

that development should be restricted.

2.2 To support policy-making, housing need is intended to be established through local authorities

working together at a housing market area (HMA) level, and address the needs arising from

households and population projections; the need for all types of housing and for housing demand

(Para 159). Plans are expected to align housing and economic evidence base and policies (Para

158). To boost significantly the supply of housing, local planning authorities are expected to use

their evidence base to ensure that local plans meet the full objectively assessed needs for market

and affordable housing in the housing market area, as far as is consistent with the policies set out in

the Framework (Para 49).

2.3 The Framework outlines that the Government is committed to ensuring that the planning system

does everything it can to support sustainable economic growth. It outlines that local planning

authorities should set a clear economic vision and strategy based on an understanding of business

needs, market changes and barriers to investment. This understanding should be achieved through

joint working with the business community, neighbouring authorities and the Local Enterprise

Partnership. Plans should then proactively seek to meet development needs, support existing and

new/ emerging sectors, and support an economy fit for the 21st Century (Paras 18-22).

2.4 Planning Practice Guidance (PPG) provides more specific advice on Housing and Economic

Development Needs Assessments, and this SHELMA Report responds to and follows the

methodology set out therein. The Guidance is clear that land supply and policy issues/ influences

must not impact on the assessment of need.

2.5 In regard to identifying the Objectively Assessed Need (OAN) for housing, the PPG outlines that the

latest official population and household projections form the starting point for assessing housing

need, but may be adjusted adjustment through sensitivity analysis. It then outlines that the need

shown by trend-based demographic projections may require adjustment to support economic

growth or improve affordability (responding to evidence from market signals and of affordable

housing need).



2.6 Employment land needs are expected to be considered across the relevant functional economic

market area, and consider both quantitative and qualitative evidence. Quantitative forecasting is

expected to include consideration of labour demand and/or labour supply, past take-up and future

property market requirements. Market signals and intelligence regarding locational/ premises

requirements for particular types of businesses, as well as infrastructure constraints are all relevant

in considering employment land needs.

2.7 Paragraph 181 in the Framework sets out that Local Planning Authorities (LPAs) will be expected to

demonstrate evidence of having effectively cooperated to plan for issues with cross-boundary

impacts when their Local Plans are submitted for examination. This highlights the importance of

collaborative working and engaging constructively with neighbouring authorities, as required by

Section 33A of the 2004 Planning and Compulsory Purchase Act.

2.8 Local plans must be ‘sound.’ The NPPF sets out that this means that they must be positively

prepared, justified, effective and consistent with national policy. This is tested by an independent

inspector through the plan examination process. To be positively prepared, a Plan “should be

prepared based on a strategy which seeks to meet objectively assessed development and

infrastructure requirements, including unmet needs from neighbouring authorities where it is

reasonable to do so and consistent with achieving sustainable development.”

Devolution Deal

2.9 The Liverpool City Region agreed a Devolution Deal with Government in November 2015 with a

top-up package agreed in March 2016. This results in the devolution of a range of powers and

responsibilities from Central Government to the new Liverpool City Region Combined Authority and

a directly elected mayor for the City Region. The Governance arrangements were subject to public

consultation in June 2016.

2.10 The Mayor will have responsibility for a devolved and consolidated transport budget; for franchised

bus services; and have strategic planning powers including the responsibility for creating:

A Single Statutory City Region Framework A Mayoral Development Corporation A Land Commission A Joint Assets Board for economic assets.

2.11 The Combined Authority will have control over a Liverpool City Region Single Investment Fund, with

resources of £30 million per annum available to unlock economic potential of the Mersey and

Superport and maximise opportunities from the High Speed 2 rail line (HS2). It will also be

responsible for 16+ skills provision, business support, inward investment and place-marketing.



Working with Government it will also provide a means of tailoring employment support to bring

people back into work.

2.12 The Statutory City Region Framework is intended to include identification of key strategic housing

and employment sites. Delivery of these can be supported by the Mayoral Development

Corporation (and Mayoral Development Zones), building on the existing framework in place within

the Liverpool City Region. The Land Commission will bring together local partners with Central

Government to coordinate and release public sector land, including former assets of the North West

Regional Development Agency.

2.13 To support innovation, the Government has committed to delivering a dedicated Smart

Specialisation Advisory Hub workshop in Liverpool offering expert advice and support. In supporting

wider business growth, Government has set out through the Devolution Deal its intention to devolve

control and responsibility for business support to local bodies.

2.14 The SHELMA has taken account of the Devolution Deal in considering future economic

performance; however it should be borne in mind that past public funding/ resources has influenced

past economic performance/ trends in considering the additionality associated with future

investment. It should be noted that West Lancashire does not fall within the governance of the

Liverpool City Region for the purposes of the Devolution Deal, although it is an associate member

of the Combined Authority.

LEP Strategic Economic Plans

2.15 The Liverpool City Region Local Enterprise Partnership’s (LEP) Strategic Economic Plan seeks to

achieve growth, in terms of both economic output (GVA) and jobs; to increase productivity; and to

rebalance the economy, in particular through reducing public sector dependency. It identifies seven

key growth sectors: the SuperPort, low carbon economy, visitor economy, advanced manufacturing,

life sciences, digital and creative, and business and professional services.

2.16 The Strategic Economic Plan targets in particular closing the £8.2 billion GVA output gap, 18,500

deficit in businesses, 90,000 deficit in jobs, the gap of 46,200 working-age residents (16-64) who

need to enter employment, and the £1,700 per head household income deficit. Five strategic growth

priorities are identified – Liverpool City Centre; the City Region Freight & Logistics Hub; multi-modal

port access; LCR2 Energy (low carbon economy); and a Capital Investment Fund.

2.17 The econometric forecasts which have informed this SHELMA Report are intended to provide an

input to the refresh of the LEP’s Strategic Economic Plan.



2.18 The Lancashire LEP, which includes West Lancashire, targets sector development, boosting

innovation and globally competitive business clusters; as well as investment in business growth and

enterprise, skills, and unlocking new development and employment opportunities to realise local

growth.

2.19 The Cheshire and Warrington LEP has identified three priorities: Atlantic Gateway in Cheshire; the

Cheshire Science Corridor; and Crewe High Growth City (linked to HS2 investment). The Atlantic

Gateway, which includes the Mersey/ Manchester Ship Canal, is intended to be developed as a

world trade, logistics, business, and innovation corridor.

Local Plan Progress and Evidence Base

2.20 The SHELMA Report is intended to be considered alongside other local evidence, such as Strategic

Housing Market Assessments for individual local authorities which provide further evidence on the

need for different types of homes; as well as local Employment Land Reviews, which review the

quality of existing employment sites and provide an overall assessment of employment supply

across sites of a range of sizes. Some elements of existing evidence base documents may however

be superseded by the SHELMA.

2.21 GL Hearn has set out below the existing evidence base regarding housing and employment needs

in each authority.

Halton: Halton’s Core Strategy was adopted in April 2013. It sets out the spatial vision for the Borough through to 2028.

The adopted Core Strategy sets out a housing target of 552 dwellings per annum. This was based on the target (500dpa) in the previous Regional Spatial Strategy (RSS) which was extant at the time of the Core Strategy hearing sessions, adjusted for the delivery backlog existing at 2010, divided it by the plan period (52dpa).

The adopted Core Strategy sets out an employment land requirement of 312.55 ha over the plan period. This figure was based on the long term past take-up rate (1992-2008) with a 20% ‘flexibility factor’.

Halton is currently in the process of preparing a Delivery and Allocations Local Plan, which will update the Core Strategy where appropriate and provide more detailed polices and site allocations, it will cover the period to 2037.

The latest local employment evidence base is the Joint Employment Land and Premises Study from January 2010 (covering Knowsley, Sefton and West Lancashire) prepared by BE Group. The latest SHMA was prepared by GL Hearn for the Mid Mersey HMA and is dated January 2016.

Knowsley: The Knowsley Local Plan Core Strategy was adopted in January 2016. It sets out the spatial vision for the Borough through to 2028.

The adopted Core Strategy sets out that 8,100 homes will provided in Knowsley between 2010 and 2028 which equates to a target of 450 dwellings per annum. The Council considered a range of scenarios, as se out within its “Technical report: Planning for Housing Growth” (link), including the 2010 Knowsley SHMA, the previous NW RSS target, and various projections and historic build rates.



The Core Strategy sets out the employment land requirements of at least 164 ha of land to be developed within primarily the key employment locations of the council including Knowsley Industrial Park (including Knowsley Business Park); Huyton Business Park; Kings Business Park; South Prescot; and Jaguar Land Rover (Halewood). The requirements were based on the Joint Employment Land and Premises Study of 2010 and the historic completions trend.

The Core Strategy allocated nine Sustainable Urban Extensions on former Green Belt land, to meet needs for housing and employment development up to 2028.

The council is currently working on SHLAA and anticipate publishing it in late 2016. They are also currently undertaking work on a further round of SPDs, including masterplans for the three largest Sustainable Urban Extensions; and a masterplan for Huyton Village.

Liverpool: Liverpool City Council is preparing a new Local Plan, and recently completed a second Regulation 18 consultation on a draft Local Plan. This is underpinned by a 2016 Strategic Housing Market Assessment, and 2016 Employment Land Study, both prepared by GL Hearn.

The precursor to the new Local Plan was a Core Strategy which was based on the RSS target of 1,950 homes per annum (net 2003-21), plus from 2008 a “Growth Point” uplift of 20% on the RSS target which equated to 390 dwellings per annum (dpa). This increased the housing target to 2,340 dpa. However the 20% uplift was not generated through an OAN process and the evidence base for the RSS was already dated at the time the Core Strategy was drafted, but was the only adopted statutory figure available to the City Council at that time.

In terms of employment, The City Council’s previous Employment Land Study (Stage 3 (2009)) set out two preferred forecast scenarios for demand over the plan period to 2026 were established, these being between 200 and 317 Ha of B-class employment land.

Sefton: The Sefton Local Plan was submitted to the Secretary of State for independent examination on 3rd August 2015. The Council is expecting to publish the modifications to the Local Plan for consultation in due course. The housing requirements set on the plan is 615 dwellings per annum for the period 2012-2030.

This pre-dated the publication of the 2012–based household projections. As a result the Local Plan Inspector, in his initial findings, calculated that the OAN should be 640 dpa. After the release of the 2014-based projections, the Inspector concluded that although the requirement had decreased by about 35 dpa, this was not a material change and did not require the OAN to be adjusted again.

The local plan submission draft proposed an employment land requirement of 88.59 ha. However the inspector suggested an adjustment to 81.59 ha.

The 2012 ‘Employment Land and Premises Study’ Refresh and the 2015 ELPS, both prepared by BE Group were the evidence base to inform the local plan requirements.

St Helens: St Helens Council adopted its Core Strategy in October 2012. According to the Core Strategy, the RSS requires St Helens to provide at least 10,260 new dwellings over the period 2003 to 2021, with an average completion rate of 570 dwellings per annum (p.a.) net of clearance replacement.

In terms of Employment Land Need, St Helens has identified that at least 37 hectares of land have to be provided to meet local needs for B1, B2 or B8 purposes to 2027 according to previous studies commissioned by the Council- St. Helens Economic Land Position Statement (2009), St Helens Employment Land & Premises Study (May 2011), and the Review of Employment Land in St Helens to 2027 (September 2011).

St Helens currently in the process of preparing a new Local Plan, covering the period to 2037. This is at an early stage, with the current programme expecting adoption around September



2018. A number of Employment and Economic reports, documents and background studies have been undertaken and used to inform the Local Plan. The most recent studies that have been prepared are the St. Helens Allocations Local Plan Economic Evidence Base Paper 2015 and the St. Helens Employment Land Needs Study 2015 delivered by BE Group. The 2016 Mid Mersey SHMA provides the latest evidence on housing need/ mix.

West Lancashire: The West Lancashire Local Plan was adopted by Council on 16 October 2013. It sets out the spatial vision for the Borough through to 2027.

The adopted Housing requirement in the Local Plan is estimated to a total requirement of 4,858 dwellings, which the Council rounded to 4,860 dwellings (an annual average of 324 dpa). This is distributed in phasing of 302 dpa for 2012-2017 and 335 dpa for 2017-2027. This is based on the Strategic Housing Land Availability Assessment (2013).

75ha of employment land would be needed over the 15 year plan period (2012-2027). This figure was derived from historic delivery figures, applying the average of the employment land delivered each year between 1992 and 2011 (excluding anomalously high years of delivery in 1997/98 and 2003/04) and multiplying it by the 15-year plan period before adding a 20% contingency allowance. This total requirement equates to an annual requirement of 5 ha of employment land. This is based on the Employment Land and Premises Study (2013).

Wirral: Wirral Council is in the process of preparing a new Core Strategy Local Plan, with a Regulation 19 Pre-Submission Consultation envisaged in September 2017.

A revised SHMA and Housing Needs Study, prepared by NLP, was published for public consultation in August 2016. The OAN figure was between 875 and 1,235 per annum to 2032 or between 855 and 1,185 per annum to 2037.

Employment evidence is set out in the Wirral Employment Land and Premises Study 2012, prepared by BE Group which will be subject to review during early 2017. The 2012 study identified a need for 204.9-259.9 ha of employment land based on past trends and the Council’s Investment Strategy.

2.22 Table 1 sets out the objectively assessed housing need identified through the various existing

evidence base documents in authorities across the Liverpool and Mid Mersey Housing Market

Areas. The existing evidence would imply an OAN of 1,756 dwellings per annum (dpa) across the

Mid Mersey HMA; and for 4,283 – 4,613 dpa across the Liverpool HMA.1

1 Using the HMA definitions as set out in Section 3 of this report



Table 1: Housing Need identified in Existing Evidence Studies

Local Authority Objectively Assessed Housing Need (dwellings per annum) Source

Halton 466 Mid Mersey SHMA, January 2016

Knowsley 450 Inspector’s Report on the Examination of Knowsley Core Strategy, 2015

Liverpool 1,472 Liverpool SHMA, June 2016Sefton 640 Inspector’s Initial Findings, Feb 2016St Helens 451 Mid Mersey SHMA, January 2016Warrington 839 Mid Mersey SHMA, January 2016

West Lancashire 302 - 335 Report on the Examination into the West Lancashire Local Plan, September 2013

Wirral 855 - 1185 SHMA and Housing Need Study, May 2016

2.23 Table 2 provides a similar profile of employment land needs identified in existing evidence base

studies. It indicates a need equivalent to 81 hectares (ha) of land per annum across the Liverpool

Functional Economic Market Area (as defined in Section 3). The highest need figures are shown in

Halton and Knowsley.

Table 2: Employment Land Need identified in Existing Evidence Studies

Local AuthorityTotal need for

the employment land (hectares)

Time PeriodEquivalent Per Annum

FigureSource

Halton 312.5 2008-2026 17.4 Joint Employment Land and Premises Study, 2010

Knowsley 164 2010-2028 9.1 Inspector’s Report on the Examination of Knowsley Core Strategy, 2015

Liverpool 120 2013-33 6.0 GL Hearn Employment Study, 2016

Sefton 69.9 2012-2030 3.9 Employment Land and Premises Study Update, Final Report August 2015.

St Helens 177 – 214 2012- 2037 8.6 Employment Land Needs Study, 2015

West Lancashire 152.5 2010-2026 9.5 Joint Employment Land and Premises Study, 2010

Wirral 204.9 – 259.9 2010-2030 11.6 Wirral Employment Land and Premises Study Refresh, 2012

2.24 There are some inevitable differences in the timing of preparation of these studies, and in the

methodology and assumptions made which should be borne in mind.

2.25 This SHELMA is intended to provide a single consistent evidence base of housing and employment land needs across the relevant FEMA and HMA geographies. In doing so it will update elements within existing evidence-base studies. The economic evidence underpinning the SHELMA is intended to support the refresh of the Liverpool City Region LEP’s Strategic Economic Plan.



Current Policy Framework – Key Points

National planning policies require objectively-assessed development needs to be assessed leaving aside issues related to land availability and development constraints. This report does this. In this context the figures in it do not represent targets for future development: they are an input to deriving these through the plan-making process alongside wider evidence and sustainability appraisal.

Existing evidence points to a need for 1756 dwellings per annum (dpa) across the Mid Mersey HMA; and between 4283 – 4613 dpa in the Liverpool HMA. It indicates an average annual need for 81 ha of employment land across the FEMA. The SHELMA is intended to provide updated assessments of future needs for housing and employment land provision.



3 HOUSING AND FUNCTIONAL ECONOMIC MARKET AREAS

3.1 The National Planning Policy Framework (NPPF) sets out that a SHMA should be prepared for the

relevant Housing Market Area (HMA) and economic development needs should be assessed

through joint working across the relevant Functional Economic Market Area (FEMA). Planning

Practice Guidance (PPG) on Housing and Economic Development Needs Assessment reiterates

this – setting out that local planning authorities should assess their development needs working with

other local authorities in the relevant housing market area or functional economic market area in

line with the Duty to Cooperate.

3.2 In advance of the preparation of the SHELMA, GL Hearn has undertaken an assessment of the

relevant HMA and FEMA boundaries in the Liverpool City Region. This is set out in the report

Defining the Housing Market Area and Functional Economic Market Area which is included in

Appendix A to this report. This section summarises the conclusions drawn.

Housing Market Geography

3.3 The Defining the Housing Market Area and Functional Economic Market Area report (Appendix A)

reviews previous work which has been undertaken to consider housing market and economic

geographies within the Liverpool City Region, and reviews more recent data including house price

data, migration and commuting flow data from the 2011 Census.

3.4 The 2007 Liverpool City Region Housing Strategy defined two housing market areas covering the

‘core’ Liverpool City Region: a ‘Northern Housing Market Area’ comprising the local authorities of

Liverpool, Sefton, Wirral, Knowsley and West Lancashire; and an Eastern or ‘Mid Mersey’ HMA

comprising Halton, St. Helens and extending into Warrington. The study also identified a ‘Southern’

HMA comprising Chester, Flintshire, Wrexham, Ellesmere Port and Vale Royal.

3.5 National research undertaken by CURDS (published 2010) defines a ‘Silver Standard’ HMA

geography which is slightly different in which Wirral is defined is part of a Chester-focused HMA;

with the rest of the Liverpool City Region authorities included within a Liverpool HMA which also

included Warrington and Wigan. This is based on 77.5% commuting self-containment, but from now

dated 2001 Census data.

3.6 There have been a number of other studies which have considered HMAs across the City Region:

The 2016 Mid Mersey SHMA reiterated the findings of the 2007 Liverpool City Region Housing Strategy and identified a HMA covering the local authorities of Halton, St. Helens and Warrington.

The 2016 Liverpool SHMA supports the inclusion of West Lancashire within a Liverpool-focused HMA comprising Knowsley, Sefton, Liverpool, West Lancashire, and Wirral.



The 2014 Sefton SHMA and 2016 Wirral SHMA concluded that due to each Borough’s high level of self-containment, both Wirral and Sefton can be considered as a single HMA in their own right for the purpose of considering housing needs in the context of the Local Plan.

The 2010 Knowsley SHMA finds that Knowsley has a low self-containment rate and that Knowsley has strong links with Sefton, Liverpool, and St. Helens. The Study concluded that Knowsley cannot be classed as a standalone HMA in its own right.

The 2009 West Lancashire SHMA concludes that West Lancashire forms part of the Liverpool City Region in housing market terms, identifying particularly links with Sefton. It also identified linkages to other areas, notably Wigan and St. Helens to the east and Central Lancashire to the north east.

Cheshire West and Chester and Flintshire and Wrexham are now identified as separate HMAs in their respective Local Plans and as part of a separate FEMA.

3.7 Existing studies thus draw differing conclusions on housing market geographies, in particular where

studies have been commissioned by individual authorities (and focused somewhat on links to/ from

this).

3.8 GL Hearn has sought to reaffirm the HMA and FEMA definitions taking account of new evidence

made available since the publication of these studies – particularly from datasets drawing from the

2011 Census. On a practical basis, the approach used has sought to define a geography based on

the aggregation of local authorities as population and household projections and economic data is

not available below this level.

3.9 The most important new analysis relates to consideration of migration and commuting patterns

drawing on 2011 Census data. This indicates a strong set of flows between Liverpool and Sefton,

Liverpool and Wirral, and Liverpool and Knowsley providing clear evidence that these should be

considered within the same strategic HMA.

3.10 There are also flows between West Lancashire and both Merseyside and Central Lancashire; but

the stronger links are towards Merseyside, particularly with Sefton. This supports the inclusion of

West Lancashire within a Liverpool-focused HMA.

3.11 Halton and St. Helens have strong migratory and commuting links both with Liverpool and with

Warrington, and St. Helens in particular also has links with Wigan. However, the flows data shows

that Wigan relates far more strongly in migration terms to Greater Manchester (whereas Halton and

St Helens do not).

3.12 Analysis of self-containment rates indicates that that most local authorities have self-containment of

commuting and migration patterns which exceeds 70%. However analysis of migration and

commuting inter-relationships is also relevant and points to strong flows between Knowsley and

Liverpool, Liverpool and Sefton, and Liverpool and Wirral (and to a lesser extent Sefton and West

Lancs). Strong flows between authorities suggests that the definition of a broader strategic HMA is



justified for the purposes of this LCR-level assessment. Liverpool, Wirral, Knowsley, Sefton, and

West Lancashire together have a self-containment of around 90%.

3.13 There is also a strong case for the grouping of St. Helens and Halton along with Warrington. St.

Helens, Halton and Warrington together have a self-containment of around 80%. Again this

exceeds the typical thresholds. There is an inter-relationship between this area and Wigan, but

Wigan relates more strongly towards Greater Manchester.

3.14 The ONS 2011 Travel to Work Areas (TTWAs) identifies a Liverpool TTWA which covers Liverpool,

Knowsley, Sefton and most of West Lancashire. Halton and St. Helens however are included within

the Warrington and Wigan TTWA, while Wirral is included in the Birkenhead TTWA.

3.15 Taking the above into consideration, the analysis broadly confirms the conclusions of the 2007

Liverpool City Region Housing Strategy as well as the 2016 Liverpool SHMA and 2016 Mid Mersey

SHMA. These identify a HMA which, based on the best fit to local authority boundaries, comprises

Liverpool, Sefton, Wirral, Knowsley and West Lancashire – the ‘Liverpool’ or ‘Central LCR HMA’;

Halton and St. Helens form a separate HMA with Warrington – the ‘Mid Mersey HMA’. There is a

degree of overlap between these two HMAs as well as with surrounding areas, as is the case with

all HMAs.

Figure 1: Housing Market Areas

© Crown copyright and database rights 2014 Ordnance Survey 100019153



3.16 The HMA analysis is focussed on the definition of HMAs at a strategic level. The focus on strategic

HMAs reflects the sub-regional scope of the work and is suitable for considering the overall

Objectively Assessed Housing Need (OAHN) figure for each authority. The analysis does not

consider more local housing market areas and housing sub-markets which are of greater relevance

in considering issues relating to more local market dynamics and housing mix. This is addressed

through SHMAs/ other studies for individual local authorities. In meeting the OAHN each authority is

subject to the Duty to Cooperate and the identified HMA boundaries should not be treated as a

basis for ignoring Duty to Cooperate obligations with neighbouring authorities.

Functional Economic Market Area

3.17 The NPPF sets out that economic development needs should be assessed for the relevant

Functional Economic Market Area (FEMA). The CLG’s 2010 publication Functional Economic

Market Areas – An Economic Note outlines that a FEMA is the geographical area over which the

local economy and its key markets operate, suggesting that this is likely to correspond to sub-

regions or city regions.

3.18 Along with defining the City Region’s HMAs, the Defining the Housing Market Area and Functional

Economic Market Area report (Appendix A) also considers the definition of the Functional Economic

Market Area (FEMA) in the City Region. The report’s findings in relation to FEMA is summarised

below.

Defining the FEMA

3.19 The PPG on Housing and Economic Development Needs Assessments sets out what FEMAs are

and provides guidance on how these should be defined. This includes taking account of LEP

geographies, travel to work and housing market areas, administrative geographies, flows of goods,

catchment areas for shopping and services, and the transport network.

3.20 The 2011 Census based data shows the Liverpool City Region divided into four Travel to Work

Areas (TTWAs) – a Liverpool TTWA, Warrington and Wigan TTWA, Birkenhead TTWA, and

Preston TTWA. However the Census data also shows complex commuting patterns across the

region with numerous main employment centres in relative proximity. While this suggests that

Warrington and Wigan should be considered as economic areas which are significantly separate to

Liverpool, areas such as St. Helens and Halton show influences from multiple directions.

3.21 Detailed review of the evidence indicates that it is reasonable to consider a FEMA which stretches

beyond the Liverpool TTWA. The City of Liverpool is an important economic and employment

centre as well as a retail and leisure destination of national importance. Liverpool is the largest retail

centre in the Liverpool City Region (LCR) with the highest level of retail expenditure, and the City is



identified as a key leisure destination for all of the LCR authorities. The Liverpool City Region LEP

area covers the authorities of Halton, Knowsley, Liverpool, Sefton, and Wirral.

3.22 Analysis of LCR’s existing development pattern and Motorway / Strategic A-Road network suggests

that key strategic A-Road and Motorway corridors along the M53, M57, M58, and M62 will likely be

vital to meeting the increased distribution needs arising from the SuperPort.

3.23 GL Hearn recognises that in many cases housing market and functional economic market areas are

coterminous, and that there can be practical benefits associated with aligning the two.

3.24 However, in undertaking this assessment for the LCR, GL Hearn consider that there is a strong

basis for defining non-coterminous HMAs and FEMA. The basis for this is described in detail in

Appendix A which identified distinctions between the Mid Mersey authorities and the rest of the City

Region in terms of housing market characteristics and HMA definition. This has led to the

identification of two HMAs in the city region: a Mid Mersey HMA and a Central LCR HMA.

3.25 In considering suitable FEMA boundaries, the wider criteria set out in PPG has been taken into

account. The evidence suggests the following conclusions:

The City of Liverpool is of major importance as a retail, cultural, and leisure destination. The City

has large catchment area extending across the LCR, covering an area which extends beyond

the Liverpool HMA.

The LCR has a complex transportation network with a network of motorways and major A-roads

which extends beyond the Liverpool HMA. The strategic road network does not provide a

distinction between the two identified HMAs or justification for two separate FEMAs. The public

transport network is broadly focussed around the City of Liverpool with Liverpool City Centre the

hub for a number of public transport routes. Again, the public transport network extends across

the wider City Region and does not justify multiple FEMAs.

Key sectors, particularly the warehouse / distribution sector, operate across a wide geographic

area. The ‘area of search’ for such uses is at a sub-regional or regional scale and relies on good

links to the strategic transport network, good access to the labour force, and in the case of LCR

good links to the Port of Liverpool. For the automotive manufacturing sector, analysis of the JLR

supply chain shows nationwide activity reliant on good access to the motorway network rather

than a particularly localised activity.

A key consideration for defining the FEMA and for policies for employment land is the potential

growth of the Port of Liverpool and the SuperPort proposals and the need for additional

warehouse and distribution floorspace to support this. Analysis of the transportation network and

drive time from the port highlights that this has economic implications which span the sub-region



and mean that it would be unsuitable to identify two separate FEMAs in the same way we have

with the HMAs.

3.26 On the balance of evidence, our analysis suggests the definition of a Functional Economic Market

Area (FEMA) which covers Halton, Knowsley, Liverpool, Sefton, St Helens, West Lancashire, and

Wirral. This is shown in Figure 2.

Figure 2: The Identified Functional Economic Market Area

© Crown copyright and database rights 2014 Ordnance Survey 100019153



3.27 Inevitably, when defining economic areas the precise boundaries are hard to define with the edges

of such areas blurring and overlapping neighbouring areas. In addition, different definitions can be

due to the criteria considered and the weight given to each criterion in the assessment. This

depends on the purposes of the study and its intended use.

3.28 The FEMA definition shown above is intended to be used principally to inform further analysis of

economic and housing market dynamics at a sub-regional level, in order to enable the preparation

of this SHELMA, to enable the identification of housing and employment land needs across the

Liverpool City Region, and to inform the development of the LCR Spatial Plan and Local Plans.

3.29 Work conducted by Merseytravel and other bodies has produced separate analysis defining the

wider functional economic area of the Liverpool City Region. This has used ONS TTW and other

data to identify wider definition of the Liverpool City Region is comprised of Halton, Knowsley,

Liverpool, Sefton, St.Helens, Wirral, West Lancs, Warrington and Cheshire West & Chester. Taking

into account key businesses, the wider functional economic area also includes Flintshire and

Wrexham. These broader economic –relationships into Cheshire and North-East Wales may be

relevant to some extent in Duty to Cooperate negotiations, however in some duty to cooperate

discussions. In preparing the SHELMA, GL Hearn has engaged with Cheshire West and Chester

and Warrington Councils, who consider themselves aligned to a Cheshire and Warrington LEP

geography. Nonetheless it is important to recognise economic interactions between these areas,

including in particular with Ellesmere Port and Chester, and with Warrington.

Housing and Functional Economic Market Areas – Key Points

The SHELMA defines two housing market areas which cover parts of the Liverpool City Region: a Liverpool HMA which includes the local authorities of Knowsley, Liverpool, Sefton, Wirral and West Lancashire; and a Mid Mersey HMA which includes Halton, St Helens and Warrington.

A single Functional Economic Markt Area is identified which includes Halton, Knowsley, Liverpool, Sefton, St. Helens, West Lancashire and Wirral. There are broader economic inter-relationships with adjoining areas in particular with Warrington, and through into North Cheshire and North-East Wales.



4 LIVERPOOL CITY REGION’S ECONOMY

4.1 In this section we move on to consider the economic characteristics of the Liverpool City Region

FEMA, considering characteristics of its economy; followed by that of the labour market.

The City Region’s Economy

4.2 The Liverpool FEMA is a £30 billion economy2 and contributes about a fifth of the North West’s

Gross Value Added (GVA). GVA per capita is around three quarters of the national figure, and the

second lowest of the 11 second-tier city regions.3

4.3 Across the FEMA, GVA grew consistently from the mid-1990s to the mid-2000s. However between

2006 and 2010, GVA growth plateaued, and fell between 2011-12 driven by a notable drop in

manufacturing output. Since 2012, growth has resumed. This trend broadly reflects the macro-

economic circumstances which saw strong growth (in a historical context) over the decade to 2007,

tempered by the ‘credit crunch’ and following recession from 2008 onwards.

4.4 More recent growth reflected improving confidence and sentiment in the market. However, following

the EU referendum in June 2016, the economic climate has worsened and this is expected to

negatively impact on short-term economic growth. It also heightens longer-term uncertainty.

Figure 3: GVA (£million, 2012 prices)

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

£-

£5,000

£10,000

£15,000

£20,000

£25,000

£30,000

£35,000

Halton Knowsley Liverpool SeftonSt Helens West Lancashire Wirral

2 Based on Annual Gross Value Added (GVA), 2015. This relates to the value of goods and services produced in the area 3 This relates to regional cities



Source: Oxford Economics

4.5 Over the last twenty years, the FEMA’s economy has grown by an average of 2.0% per annum, in

line with that seen across the North West region, but some way below the 2.5% pa growth seen

nationally. Growth rates were similar to national trends over the period to 2006; however the City

Region’s economy did not really grow between 2006-11. Manufacturing output contracted in 2012

resulting in a fall in GVA. Since 2012 the City Region’s economy has seen a return to growth, with

growth roughly in line with the North West trend.

Figure 4: Indexed GVA Growth, 1995-2015

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

North WestUKLCR and West Lancs

Inde

x (1

995=

1)

Source: GLH Analysis of OE data

4.6 Data on GVA, as a measure of the total value of goods and services produced, can be used to

provide an indication of the relative size of economy in different local authority areas. Liverpool is

the largest economy within the LCR FEMA and contributes 34% of GVA. This is followed by Wirral

at 14%. The smallest economies within the FEMA are those of St Helens and West Lancashire.



Table 3: Size of Economies at Local Authority Level – GVA, 2015 GVA, 2015 (£ '000) % FEMA GVA

Halton 3270 11%Knowsley 3317 11%Liverpool 10323 34%Sefton 3884 13%St Helens 2802 9%Wirral 4298 14%West Lancashire 2078 7%FEMA 29972 100%


4.7 Over the 1996-2007 period, prior to the recession, Knowsley, Halton and Liverpool saw the

strongest economic growth, in each case with growth in GVA of over 4% pa. Given Liverpool’s

economic size, it is clear that growth in the City’s economy was a key driver of performance across

the FEMA as a whole. Strong growth rates in Knowsley and Halton are in part a reflection of their

relative smaller economic size. Other parts of the City Region saw slower economic growth relative

to regional and national benchmarks.

4.8 All local areas have seen a decline in the pace of growth post-recession, as has been the case

nationally. The national economy over the period since 2007 has grown by an average of 1.1% pa

influenced by the economic recession and weak global growth since 2013 reflecting disappointing

performance in the US, Japan and Eurozone and a notable slowing of the Chinese economy.

4.9 Liverpool, the largest economy, has failed to recover to its pre-recession output, and weighed down

growth across the FEMA as a whole. Sefton, St Helens and Wirral’s economies are also still smaller

in 2015 than they were in 2007.

4.10 In contrast, as Figure 5 shows, there has been a strong level of growth in economic output in Halton

and Knowsley, growing on average by 3.6% and 3.0% respectively and continuing to out-perform

wider benchmarks. This has been influenced by concentrations of economic activity in high value

sectors such as manufacturing and information and communications.



Figure 5: GVA Growth over last two Economic Cycles

Halton

Know

sley

Liverpool

Sefton

St H

elens

Wirral

West Lancashire

FEM

A

North W

est

UK

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

1996-20072007-2015

Annu

al G

row

th in

GVA


4.11 Across the Liverpool Functional Economic Market Area there were a total of 720,000 jobs in 2014.

The local authority with the greatest number of total jobs is Liverpool with 258,000 – equivalent to

36% of the FEMA total, and considerably more than any other single authority area. This highlights

the City’s role as an economic centre for the wider FEMA.

4.12 Wirral and Sefton are the authorities with the next highest number of jobs with 112,000 (16%) and

102,000 (14%) jobs respectively. The remaining four local authorities all have lower numbers of

jobs: 68,000 jobs (9%) in St. Helens; 67,000 jobs (9%) in Knowsley; 60,000 jobs (8%) in Halton; and

53,000 jobs (7%) in West Lancashire.



Figure 6: Total Jobs

Source: ONS, 2014

4.13 In 2015 ONS recorded a total of 41,800 enterprises in the Liverpool FEMA. 11,700 (28%) of these

were in Liverpool local authority area; 8,200 (20%) were in Wirral; 7,300 (17%) were in Sefton; there

were 4,200 (10%) in both West Lancashire and St. Helens; while there were 3,200 (8%) in Halton;

and 2,900 (7%) in Knowsley.

4.14 Across the FEMA, 87% of enterprises are micro-enterprises – meaning they have between 0 and 9

employees. This is slightly lower than the regional rate of 88% and the national rate of 89%. There

is a greater proportion of small enterprises – 10 to 49 employees – in the FEMA (11%) than

regionally (10%) or nationally (9%). The proportion of medium-sized and large enterprises in the

FEMA is broadly in line with regional and national rates – 2% and 0.4% respectively. Within the

FEMA the greatest numbers of medium-sized and large enterprises are located in Liverpool –

reflecting its status as the area’s primary City Centre.



Figure 7: Business Counts – Enterprises

Halton

Knowsle

y

Liverp

oolSefto

n

St. Hele

ns

West La

ncashi

re Wirral

0

2,000

4,000

6,000

8,000

10,000

12,000

Large (250+)Medium-sized (50 to 249)Small (10 to 49)Micro (0 to 9)

Enter

prise

s, 20

15

Source: UK Business Counts, 2015

4.15 Jobs density is the ratio of jobs to residents aged 16-64 in an area. This provides a broad measure

of how the number of jobs in an area relates to an area’s resident population. Across the FEMA as

a whole the jobs density is 0.69 meaning there are 0.69 jobs for every resident of working age. This

compares to a North West figure of 0.78 and a UK figure of 0.82.

4.16 The jobs density data in effect points to a lower level of jobs than we might expect. If the jobs

density was to equal the national average, the FEMA would contain 133,000 (18%) more jobs than

it does. This is a function principally of the characteristics/ strength of the economy, albeit

influenced in part by workforce participation and skill levels.

4.17 Within the Liverpool FEMA the area with the highest jobs density is Liverpool itself with a density of

0.80. The jobs density in Liverpool should arguably be higher as cities are typically hubs for jobs

and draw people in from surrounding areas. This partly reflects above average worklessness.

4.18 West Lancashire and Halton have the next highest jobs densities of 0.76 and 0.75 respectively,

while Knowsley is slightly lower at 0.71. St. Helens, Sefton, and Wirral have lower levels of jobs

densities still with 0.62, 0.61, and 0.57 respectively, showing lower numbers of jobs in these



authorities relative to their working age populations. It is notable that the jobs density in all of the

FEMA local authorities falls below national benchmarks – pointing to potential to support jobs

growth through increasing economic participation.

Figure 8: Jobs Density

Source: ONS, 2014

4.19 Table 4 shows the total number of jobs in the FEMA divided by broad sector. The sector with the

most jobs is Human health and social work with 124,700 jobs. The Wholesale and retail trade sector

constitutes the second most jobs in the FEMA with 108,900. There are also a considerable number

of jobs in Education (66,500 jobs), Manufacturing (62,000), Administration and support services

(52,400), Professional, scientific and technical activities (50,000), and accommodation and food

services (49,100).

4.20 Table 4 also shows the jobs growth (or losses) in each sector since 1991. Total jobs growth over

this period has increased relatively modestly – by 23,600. Table 4 shows stronger relative growth in

Human health and social work which has grown by 36,500 jobs over this period. Other sectors

which have seen growth include Professional, scientific and technical (23,700 jobs), Administrative

and support services (19,800), and Education (14,100). Service-based sectors have driven

employment growth.



4.21 There have been substantial job losses in the Manufacturing sector, where there has been a net

reduction of 54,800 jobs over the period 1991-2015. Employment in the sector has dropped

substantially by 47% over this period.

4.22 The Financial and insurance sector has also seen considerable losses of 13,800 jobs. Public

administration and defence has seen 8,500 job losses; and Construction has seen 6,300 job losses

over this period.

Table 4: Total Jobs and Jobs Growth by Sector, FEMASector Total Jobs 2015 Jobs Growth 1991-2015Agriculture, forestry and fishing 5,300 -1,000Mining and quarrying 200 -1,200Manufacturing 62,000 -54,800Utilities 5,200 2,700Construction 41,300 -6,300Wholesale and retail trade 108,900 -3,200Transportation and storage 37,200 1,900Accommodation and food service 49,100 11,700Information and communication 16,600 -400Financial and insurance 17,500 -13,800Real estate 10,600 3,100Professional, scientific and technical 50,000 23,700Administrative and support service 52,400 19,800Public administration and defence 38,800 -8,500Education 66,500 14,100Human health and social work 124,700 36,500Arts, entertainment and recreation 18,300 -200Other service activities 20,500 -500Total 725,200 23,600


4.23 The sectoral growth trend for the FEMA is shown in Figure 9 overleaf. This shows sectoral

performance, in terms of the number of jobs, over the period from 1991 to 2015. Figures are based

on a rolling three year average4.

4.24 Figure 9 shows the strong continued growth in the Human health and social care sector since 1998

which continued to see steady growth throughout the post-recession period from 2008 to 2012.

4.25 The other most obvious change shown in Figure 9 is the decline in manufacturing jobs from the

mid-1990s through to 2011.

Figure 9: Jobs Growth by Sector (3 Year Rolling Average), 1991-2015

4 This smooths out year-on-year variations which in some instances reflect data anomalies



1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

0.0

40.0

80.0

120.0

Agriculture, forestry and fishing Mining and quarryingManufacturing UtilitiesConstruction Wholesale and retail tradeTransportation and storage Accommodation and food serviceInformation and communication Financial and insuranceReal estate Professional, scientific and technicalAdministrative and support service Public administration and defenceEducation Human health and social workArts, entertainment and recreation Other service activities

Jobs (0

00s)




4.26 As shown in Figure 9, the FEMA has seen a major decline in manufacturing jobs since the early

1990s. Since 2011 this declining trend has reversed and there has been a modest growth. Looking

at the Manufacturing sector in more detail allows to identify a number of sub-sectors which have

seen strong levels of growth over the most recent 5 years.

4.27 Figure 10 sets out the growth in Manufacturing jobs by sub-sector over the period 2010-2015.

During this period certain sub-sectors have seen considerable growth: Manufacture of motor

vehicles and trailers has seen a growth of 2,700 jobs, while Manufacture of other transport

equipment saw a further growth of 600 jobs. The Manufacture of pharmaceuticals, rubber and

plastic products, and other non-metallic minerals sub-sectors all saw growth of 1,600 jobs.

Figure 10: Growth in Manufacturing Jobs, 2010-2015

Manufacture of food products

Manufacture of chemicals and chemicals

Printing and reproduction of recorde

Manufacture of beverages

Manufacture of fabricated metal products

Manufacture of basic metals

Manufacture of wearing apparel

Manufacture of electrical equipment

Manufacture of paper and paper products

Manufacture of other transport equipment

Manufacture of other non-metallic minerals

Manufacture of basic pharmaceutical

-1 -0.5 0 0.5 1 1.5 2 2.5 3

Jobs (000s)

Source: GLH analysis of Oxford Economics

4.28 It is important to assess the relative concentration of employment in different sectors (compared to

wider benchmarks) in order to understand the growth potential of the FEMA’s economy. An area

with a strong concentration and competitive advantage in higher value sectors which are expected



to grow can be expected to post stronger relative economic growth compared to an area which has

an over-dependence on sectors which are expected to perform comparatively more weakly.

4.29 We can use a location quotient to assess how similar the FEMA’s jobs structure is to other areas.

Table 5 sets out the location quotient of the FEMA compared to the North West and the UK. A

location quotient of 1.00 for a particular sector means that the comparison areas have the same

proportion of jobs in that sector. A location quotient of greater than 1.00 means that there is a

relatively large proportion of jobs in that sector, while a location quotient of less than 1.00 means

fewer jobs.

4.30 Comparing the FEMA’s job structure to that of the North West and the UK shows that the FEMA has

a relatively high number of jobs in the public sector – with a strong representation of employment in

Public administration and defence as well as in Human health and social work, but also to a lesser

extent in Education.5 The FEMA also has a higher proportion of jobs in Transport and storage than

the regional or national figures. The location quotient analysis shows that compared to the UK, the

FEMA has a higher proportion of Manufacturing jobs, however the proportion is lower than the

North West level.

Table 5: Location Quotient, FEMA vs North West and UK

FEMA vs North West FEMA vs UKAgriculture, forestry and fishing 0.84 0.62Mining and quarrying 0.48 0.12Manufacturing 0.87 1.08Utilities 0.79 0.74Construction 0.91 0.87Wholesale and retail trade 1.00 1.02Transportation and storage 1.12 1.13Accommodation and food service 0.96 1.02Information and communication 0.82 0.57Financial and insurance 0.89 0.71Real estate 0.95 0.93Professional, scientific and technical 0.82 0.80Administrative and support service 0.95 0.86Public administration and defence 1.25 1.22Education 1.08 1.06Human health and social work 1.20 1.37Arts, entertainment and recreation 0.99 0.87Other service activities 1.01 1.01


5 These sectors include public and private sector jobs. However they contain significant levels of public sector employment and growth potential is influenced by public spending.



4.31 Employment in the FEMA is particularly dependent on sectors dominated by the public sector,

where growth will be influenced by spending restraints, and in the Manufacturing sector which has

historically seen long-term decline in net employment figures, although in recent years this trend

has abated. In contrast there is a relatively low concentration of employment in those sectors which

are expected to be key drivers of growth looking forwards such as professional, scientific and

technical activities; and to a lesser extent administration and support services. These are structural

issues which may affect the ability of the FEMA to match national economic performance in these

sectors in the short/ medium-term.

4.32 This is illustrated in the graphs below which show the past and projected future performance in

these sectors in the LCR compared to the UK. This shows the Professional and Business Support

sectors are forecast a higher growth rate in LCR than across the UK as a whole. Conversely, the

Public Sector is forecast modest growth at a national level but roughly zero growth in the LCR.

Manufacturing is forecast to decline in both areas although the forecast decline is less in the LCR

than nationally.

Figure 11: Selected Sectors Jobs Growth, LCR vs UK (Index: 1.00 = 1991-2012 Average)

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

UK

Manufacturing Professional Business Support Public Sector

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

LCR

Manufacturing Professional Business Support Public Sector




4.33 There are considerable variances in the employment structure of the FEMA authorities. Table 6

provides location quotient analysis for each of the FEMA authorities compared to the FEMA as a

whole, the North West, and the UK. Broad outcomes for each authority are set out below:

Halton

o Strengths in Manufacturing, Transport and storage, Information and communication, and

Administrative and support service sectors compared to all wider areas.

o Relative strength in Professional, scientific and technical activities compared to the FEMA but

broadly in line with NW and UK levels.

o The data in Table 6 shows a very high location quotient in Mining and quarrying in Halton,

however this is skewed by the low proportion of jobs in this sector across all areas and

should be disregarded.

o Lower numbers of jobs in the public sector compared to all comparator geographies.

o Low representation of Financial and insurance services.

Knowsley

o Particularly high proportion of Manufacturing jobs compared to the FEMA as a whole as well

as wider geographies.

o Also significant jobs in Human health and social care – even compared to FEMAs high rate –

and Administrative and support services.

o Low representation in professional services (Information and communication, Financial and

insurance, Real estate, Professional, scientific and technical sectors).

o Low number of jobs in Public administration and defence.

Liverpool

o Highest proportion of jobs in professional services in the FEMA. However, Information and

communication and Professional, scientific and technical sectors still lower than UK average.

o High proportion of public sector jobs – particularly in Public administration and defence –

when compared to FEMA, regional, and national proportions.

o High number of jobs in Accommodation and food service.

o Lower representation of manufacturing and construction jobs compared to all comparator

areas.

Sefton

o High proportion of public sector jobs when compared to FEMA, regional, and national trends,

particularly in Public administration and defence and Human health and social work.



o High proportion of Financial and insurance jobs compared to FEMA and North West levels

and broadly in line with UK.

o All other Professional service sectors less well represented.

o Lower representation of manufacturing and construction jobs compared to all comparator

areas.

St. Helens

o Particularly high proportion of jobs in the Transportation and storage sector compared to all

wider geographies.

o High proportion of jobs in Manufacturing sector, particularly compared to the FEMA and UK


insurance, Real estate, Professional, scientific and technical sectors), although the Real

Estate sector bucks this trend.

o Lower proportion of jobs in the Public sector, especially compared to elsewhere in the FEMA.

Education and Human health and social care jobs in line with UK average while Public

administration and defence below national rate.

West Lancashire

o High proportion of Manufacturing jobs compared to the FEMA as a whole as well as wider

geographies.

o Other sectors with high location quotients compared to wider areas are Transportation and

storage and Accommodation and food services.

o Very strong in Agriculture, forestry and fishing, however this is skewed by the low proportion

of jobs in this sector in all areas.


insurance, Real estate, Professional, scientific and technical sectors).

o Public administration and defence jobs well below all wider geographies. Education and

Human health and social care below FEMA levels but broadly in line with UK.

Wirral

o Particularly high proportion of jobs in Human health and social care: above the FEMA level

which is itself higher than regional and national levels.

o Higher proportion of jobs in Public administration and defence than North West or UK.

o Manufacturing jobs slightly above FEMA and UK levels but below North West average.

o Low number of jobs in Information and communication and Financial and insurance sectors.



o Relative strength in Professional, scientific and technical activities compared to the FEMA

and broadly in line with national levels.



Halton Knowsley Liverpool Sefton St. Helens West Lancashire Wirralvs

FEMA

vs NW

vsUK

vs FEM

Avs

NWvsUK

vs FEM

Avs

NWvsUK

vs FEM

Avs

NWvsUK

vs FEM

Avs

NWVsUK

vs FEM

Avs

NWvsUK

vs FEM

Avs

NWvsUK

Agr 0.77 0.64 0.48 0.38 0.32 0.23 0.20 0.17 0.12 0.75 0.63 0.47 0.93 0.78 0.58 7.01 5.87 4.36 0.73 0.61 0.45Min 7.25 3.51 0.90 0.46 0.22 0.06 0.30 0.14 0.04 0.74 0.36 0.09 0.33 0.16 0.04 0.17 0.08 0.02 0.00 0.00 0.00Man 1.68 1.47 1.82 2.30 2.01 2.49 0.44 0.39 0.48 0.52 0.45 0.56 1.31 1.15 1.42 1.57 1.37 1.70 1.06 0.93 1.15Uti 0.08 0.07 0.06 1.08 0.85 0.80 0.56 0.44 0.41 0.49 0.39 0.36 1.55 1.22 1.14 1.24 0.98 0.91 1.34 1.05 0.99Con 1.16 1.06 1.01 1.24 1.14 1.09 0.69 0.63 0.60 1.14 1.04 1.00 1.18 1.08 1.03 1.26 1.15 1.10 1.10 1.01 0.96Who 1.02 1.02 1.04 0.75 0.75 0.76 1.02 1.02 1.04 1.10 1.10 1.12 1.16 1.16 1.18 1.00 1.00 1.02 0.92 0.92 0.94Tra 1.42 1.59 1.60 1.06 1.19 1.19 0.95 1.07 1.07 0.81 0.91 0.92 1.53 1.72 1.73 1.18 1.32 1.33 0.62 0.70 0.70Acc 0.73 0.71 0.75 0.46 0.44 0.47 1.21 1.17 1.24 1.06 1.03 1.09 0.83 0.81 0.85 1.24 1.20 1.27 0.92 0.89 0.94Inf 2.41 1.97 1.37 0.51 0.42 0.29 1.25 1.02 0.71 0.66 0.54 0.37 0.69 0.56 0.39 0.57 0.46 0.32 0.69 0.57 0.39Fin 0.40 0.35 0.28 0.88 0.78 0.62 1.46 1.30 1.04 1.43 1.27 1.01 0.40 0.36 0.29 0.86 0.77 0.61 0.40 0.36 0.28Rea 0.87 0.83 0.81 0.45 0.43 0.42 1.34 1.26 1.24 0.80 0.76 0.74 1.15 1.08 1.06 0.45 0.43 0.42 1.03 0.98 0.96Pro 1.27 1.04 1.02 0.51 0.42 0.41 1.09 0.90 0.87 0.84 0.69 0.68 0.73 0.60 0.58 1.12 0.92 0.89 1.19 0.98 0.96Adm 1.37 1.30 1.18 1.40 1.33 1.20 0.99 0.94 0.85 0.74 0.70 0.63 1.30 1.24 1.12 0.62 0.59 0.53 0.82 0.78 0.70Pub 0.62 0.78 0.76 0.48 0.60 0.58 1.23 1.53 1.50 1.57 1.95 1.91 0.70 0.87 0.85 0.34 0.42 0.41 1.00 1.24 1.21Edu 0.74 0.80 0.78 0.79 0.85 0.84 1.15 1.24 1.21 1.14 1.23 1.21 0.94 1.01 0.99 0.98 1.05 1.03 0.85 0.92 0.90Hum 0.49 0.59 0.68 1.22 1.46 1.67 1.03 1.23 1.41 1.06 1.27 1.45 0.74 0.88 1.01 0.77 0.92 1.06 1.30 1.56 1.79Art 0.81 0.80 0.71 0.85 0.84 0.74 1.11 1.10 0.97 1.07 1.06 0.93 1.07 1.06 0.93 0.55 0.55 0.48 1.08 1.07 0.94Oth 0.78 0.79 0.79 0.70 0.70 0.71 1.00 1.00 1.01 1.15 1.16 1.17 1.06 1.07 1.08 0.83 0.84 0.85 1.22 1.23 1.23

Table 6: Location Quotient, Local Authorities vs FEMA, North West, and UK

Source: GLH analysis of Oxford Economics, 2016


4.34 The above analysis provides a snapshot of the FEMA’s existing economic structure and past

economic performance. These trends will, inevitably, be a large influencing factor on the FEMA’s

future economic performance. In addition to past trends and the current economic circumstances,

future economic performance will be influenced by policy intervention, infrastructure development

and investment opportunities.

4.35 Liverpool Local Enterprise Partnership (LEP) published the Liverpool City Region Growth Strategy

in 2016. This sets out a number of Growth Sectors which the LEP has identified have particular

opportunity to grow and increase productivity. The LEP’s stated ambition is for ‘each sector to

become a beacon of excellence, productivity and accelerated growth, through investment in

facilities, infrastructure, networks, people and innovation, creating more and higher skilled jobs and

more growth businesses throughout our economy’.

4.36 The LEP Growth Sectors are:

Advanced manufacturing – particularly automotive, consumer goods, chemicals, and rail manufacturing.

Digital and creative – focussing in all sub-sectors but particularly in high performance and cognitive computing and sensor technology;

Financial and professional services – with particular strengths in private clients, maritime and business services;

Health and life sciences – focussing on precision medicine, infectious disease, children’s health, independent living and eHealth;

Low carbon energy and marine energy; Maritime and logistics; Visitor economy – including high-value activities such as conferences and business visits; the

cruise market; special sporting and other events.

4.37 The Growth Strategy expects these sectors to be the catalysts to provide a powerful engine for

increased productivity and the sustained growth of the City Region’s economy over the coming

decades. As such, these sectors will be the focus of strategic sector-based interventions to

accelerate growth.

4.38 In considering the influence of these on future economic performance, it should be borne in mind

that past performance will have been affected by policies/ investment, and thus consideration needs

to be given as to how the future may differ from the past. Public sector spending restraints are

relevant in this respect.



Labour Market Characteristics

4.39 In 2015 the working age population aged 16-64 of the FEMA was 1,038,000. The population trend

of each of the local authorities in the FEMA is shown in Figure 12. The working age population in

the FEMA is 17,700 lower than in 1991: this is in part a symptom of relative economic performance.

4.40 The decade from 1991 to 2000 saw the working age population drop by 50,100. This trend then

reversed between 2000 and 2008 growing by 32,800. This was driven in particular by strong

population growth in Liverpool during this period, as shown in Figure 12 below. Since 2011, Sefton

and Wirral have witnessed a slight decline in their working age populations. Following the economic

down turn in 2008, the working age population across the FEMA as a whole has remained relatively

stable.

Figure 12: Working Age Population (aged 16-64)

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

HaltonKnowsleyLiverpoolSeftonSt HelensWest LancashireWirral

Source: Oxford Economics, 2016

4.41 Within the FEMA, 72.0% of the working age population (aged 16 to 64) is economically active.

Economically active persons include those currently in employment (as an employee or self-

employed); those not currently in employment but who are seeking work and are ready to start work

within two weeks; or those who are not currently in employment, but waiting to start a job already

obtained and available.



4.42 The economic activity rate6 is shown in Figure 13. Across the FEMA as a whole the economic

activity rate is lower than the North West rate of 75.5% and the national rate of 77.7%. Within the

FEMA, Halton has the highest economic activity rate at 78.0% while the lowest rate is in Liverpool

with 66.1%.

Figure 13: Economic Activity Rate – Aged 16-64

Source: Annual Population Survey, March 2016

4.43 Across the FEMA, the employment rate among working age persons (aged 16 to 64), the proportion

of those in work, is 68%. This is below the North West rate of 71% and the national rate of 74%.

Within the FEMA, Halton has the highest employment rate at 75%. Sefton (73%) and West

Lancashire (72%) also have employment rates marginally above the North West average. The

lowest employment rates in the FEMA are in Liverpool (61%).

4.44 It is clear that the employment rate in all authorities within the FEMA is below the national average,

with a 12 percentage point (pp) difference evident in Liverpool and substantial 6 pp difference

across the FEMA based on averages recorded over the last three years.

6 This is the proportion of all economically active people regardless of their current employment status.



Table 7: Employment Rates: Differential to UKEmployment Rate, % 16-64

(2014-16) PP Difference to National

Halton 71.3% -1.4%

Knowsley 66.8% -5.9%

Liverpool 60.7% -12.0%

Sefton 72.6% -0.1%

St Helens 68.6% -4.1%

West Lancashire 70.7% -2.0%

Wirral 68.5% -4.2%

Liverpool City Region FEMA 66.7% -6.0%

North West 70.1% -2.6%

England & Wales 72.7% 0.0%

Source: GLH Analysis of Annual Population Survey Data, 3 Year Average

4.45 Whilst GL Hearn would expect some difference in employment rates between more urban and rural

areas, a comparison with LEP areas focused on metropolitan areas in the North and Midlands

points to a clear potential for higher employment rates to be supported. The analysis indicates that:

If the employment rate across the FEMA was to match that in the Nottingham/Derby Metropolitan Area, there would need to be 52,000 more jobs;

If the employment rate was to match that in the Leeds City Region LEP, there would need to be 46,000 more jobs;

Even relative to Greater Manchester, there is a shortfall of 25,500 jobs within the Liverpool City Region FEMA.

Figure 14: Comparative Analysis of Employment Rates compared to similar LEP/ Metropolitan Areas, 2015/16

Greater Birmingham LEP

Black Country LEP

Liverpool City Region FEMA

Greater Manchester LEP

Sheffield City Region LEP

Leeds City Region LEP

Leicester & Leicestershire LEP

Nottingham / Derby UA

62 64 66 68 70 72 74

Employment Rate, Ages 16-64

Source: GLH Analysis of Annual Population Survey Data



4.46 GL Hearn’s analysis would suggest that there is potential for the employment rate to increase in all

of the local authorities in the City Region through increasing both the number of available jobs and

the density of employment (and before any allowance is made for pensionable age changes and

wider trends towards increased economic participation).

4.47 An analysis of the employment rate in Liverpool relative to other cities in the North and Midlands is

shown in Table 8. Each of these cities includes a significant student population, which will influence

employment rates. Nonetheless, Liverpool has an employment rate at the lower end of the

spectrum pointing to significant levels of worklessness, and the potential to improve employment

rates – be it through bringing people back into work, or due to growing the labour force through

increased in-migration. There is a 3 pp difference to Manchester, 5.0 pp difference to Coventry and

substantial 13.4 pp difference to Leeds.

Table 8: Employment Rates in Cities in North and Midlands Employment Rate 16-64 PP Difference to Liverpool

Birmingham 60.4 -0.4

Liverpool 60.8 0.0

Leicester 63.3 2.5

Manchester 63.8 3.0

Nottingham 65.2 4.4

Coventry 65.8 5.0

Sheffield 68.3 7.5

Leeds 74.2 13.4

Source: GLH Analysis of Annual Population Survey data

4.48 Similarly an analysis of employment rates indicates that there is potential for the rate to improve in

all of the local authorities within the FEMA. Halton has the highest employment rate in the Liverpool

City Region, but this is 9.3 pp below that in Erewash and 8.3 pp below that in North West

Leicestershire (the local authorities with the highest employment rates shown in the table below).

Table 9: Comparison of Strongest Employment Rates by LA in City Regions Considered, 2015-16

Employment Rate % 16-64) Highest LA Local Authority

Liverpool FEMA 74.9 Halton

Sheffield 77.3 NE Derbyshire

Greater Manchester 79 Trafford

Leeds 80 Selby

Birmingham & Black Country 81.7 East Staffordshire

Leicestershire 83.2 NW Leicestershire

Nottingham/Derby 84.2 Erewash

Source: GLH Analysis of Annual Population Survey data



4.49 The vast majority of employed persons are employees. Across the FEMA as a whole, 88% of

people in employment count as employees – slightly higher than regional (87%) and national (86%)

rates. Self-employment accounts for 12% of those who are in employment – 9% of the working age

population. This indicates that levels of enterprise are below average.

4.50 West Lancashire has the highest level of self-employment with 13% of the working age population

self-employed. West Lancashire is the only authority in the FEMA with a higher self-employment

rate than the regional (9%) or national rates (10%).

Figure 15: Employment Rate – Aged 16-64

Halton

Knowsle

y

Liverp

oolSefto

n

St. Hele

ns

West La

ncashi

re Wirral

FEMA

North W

est

United K

ingdom

0%10%20%30%40%50%60%70%80%90%

100%

Employment rate - aged 16-64% aged 16-64 who are employees


4.51 Across the FEMA as a whole, 76% of workers currently in employment are in full-time employment

while 24% are in part-time jobs. The FEMA’s full-time employment rate is slightly higher than the

North West average of 75% and the national average of 74%.

4.52 There is a greater proportion of working males in full-time employment than for working females.

Across the FEMA, the proportion of working males in full-time work is 89% compared to 63% of

females. The FEMA’s male full-time working proportion is similar to that of the North West and

nationally (both 88%), while the FEMA’s proportion of full-time working females is higher than the

rates for the North West (61%) or the UK (59%).



Figure 16: Full-Time and Part-Time Employment

Halton

Knowsle

y

Liverp

ool

Sefton

St. Hele

ns

Wes

t Lan

cash

ireW

irral

North W

est

United

King

dom

0%

10%

20%

30%

40%

50%

60%

Females, Part-timeFemales, Full-timeMales, Part-timeMales, Full-time


4.53 Figure 17 shows the unemployment rate across the FEMA7. Across the FEMA as a whole, the

unemployment rate was 5.7%. This is higher than both the North West and national rates – both

5.4%. Unemployment is particularly high for the younger age groups.

4.54 Within the FEMA, Liverpool has the highest rate of unemployment at 7.8%. St. Helens (7.1%) and

Knowsley (6.7%) are the next highest. The other FEMA authorities all have unemployment rates

below the regional and national averages (both 5.4%).

7 A person is classified as unemployed if they are not currently in employment, are available to start work in the next two weeks, and have either looked for work in the last four weeks or are waiting to start a new job.



Figure 17: Unemployment Rate – Aged 16-64

Source: Annual Population Survey, December 2015

4.55 Parts of the City Region have relatively high levels of deprivation. ONS ranks local authorities on

indices of deprivation. Nationally, Knowsley is ranked as the 5 th most deprived authority, while

Liverpool is ranked 7th, indicating considerable challenges in these authorities. Halton is ranked 36 th

most deprived nationally, with St. Helens 52nd; Sefton 102nd, Wirral 106th, and West Lancashire

164th. South Sefton and the north-eastern part of the Wirral are however also relatively deprived.

4.56 Figure 18 shows levels of deprivation across the FEMA. It shows (at a Mid-Super Output Area level)

the percentage of households which are classed as deprived in one or more dimension of

deprivation. ONS measures four dimensions of deprivation:

Employment – any member of a household not a full-time student is either unemployed or long-term sick;

Education – no person in the household has at least level 2 education, and no person aged 16-18 is a full-time student;

Health and disability – any person in the household has general health 'bad or very bad' or has a long term health problem; and

Housing – the household's accommodation is either overcrowded, with an occupancy rating -1 or less, or is in a shared dwelling, or has no central heating.



4.57 This shows that there is considerable deprivation across much of Liverpool – particularly across the

north and north-east parts of the authority and spreading into much of the northern half of Knowsley

and South Sefton. It also shows deprivation around the towns of Birkenhead and Wallasey in Wirral,

Runcorn and Widnes in Halton, some wards in Southport in Sefton, Skelmersdale in West

Lancashire, and St. Helens.

Figure 18: Households Deprived in One or More Dimensions of Deprivation

Source: ONS, 2011

4.58 Figure 19 shows the level of employment in each area by occupation group. The occupation groups

range from Group 1: Managers, directors and senior officials to Group 9: Elementary occupations.

Across the FEMA as a whole there is a smaller proportion of working residents working in Group 1

professions than there are in the North West or UK. The proportion of persons in Group 3

professions (associate professional and technical occupations) is also lower in the FEMA than the

North West or UK.

4.59 The proportion of workers in the FEMA in Group 2 professions (professional occupations) and

Group 5 professions (skilled trades) is broadly in line with the regional and national rates, as is

those in Group 9 (elementary occupations).



4.60 Group 4 (administrative and secretarial occupations), Group 6 (caring, leisure and other service

occupations), Group 7 (sales and customer service occupations), and Group 8 (process, plant and

machine operatives) are all over represented in the FEMA compared to regional and national rates.

4.61 There is considerable variation in occupational employment across the FEMA authorities. Sefton

has the highest proportion of residents in Group 1 and Group 4 occupations, with both figures

higher than the North West or UK equivalents. Liverpool and Wirral have notably higher levels of

workers in Group 2 occupations – both well above the regional and national figures. Halton,

Knowsley, St. Helens, and West Lancashire have greater proportions of residents employed in

Groups 4-9.

Figure 19: Employment by Occupation

Halton

Knowsle

y

Liverp

oolSefto

n

St. Hele

ns

West La

ncashi

re Wirral

FEMA

North W

est

United K

ingdom

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

7.8% 6.4% 7.5% 10.9% 7.2% 7.7% 8.1% 8.1% 10.0% 10.4%

12.6% 13.5%23.1% 19.3%

17.6% 15.4%22.3% 19.4% 19.3% 19.9%

12.9% 10.4%

12.4% 14.8%

9.7% 10.2%

12.7%12.3% 12.9% 14.1%11.1%

11.6%

11.0%12.9%

13.8% 13.0%

12.3%12.1% 11.4% 10.7%12.3% 13.0%

8.4%9.2%

14.2%10.0%

9.5%10.3% 10.3% 10.7%9.8% 13.5%

9.9%9.6%

10.5%15.6%

8.5% 10.4% 9.5% 9.3%10.6% 9.8%8.7%

8.0%9.5%

5.5%9.1% 8.8% 8.4% 7.7%

11.1% 9.5% 7.0%5.7% 6.4%

10.4%7.1% 7.5% 7.1% 6.5%

11.8% 12.4% 11.8% 9.6% 11.2% 12.2% 10.3% 11.2% 11.2% 10.8% 9: elementary occupations8: process, plant and machine operatives7: sales and customer service occupations6: caring, leisure and other service occupations5: skilled trades occupations4: administrative and secretarial occupations3: associate prof & tech occupa-tions2: professional occupations1: managers, directors and senior officials


4.62 Figure 20 shows the qualification profile of the FEMA authorities. This shows the highest

qualification level of residents in each area. Across the FEMA, the proportion of people with NVQ4

level qualifications (equivalent to a bachelor’s degree) is 29%. This is lower than the North West

(33%) and UK (37%). West Lancashire has the highest with 33%, while Wirral, Liverpool, and

Sefton have similar levels.



4.63 The proportion of people in the FEMA with no qualifications is 11%. This is slightly higher than

regional and national averages. The highest levels are seen in Knowsley (16%), Liverpool (14%),

and St. Helens (12%). Halton, Sefton, and Wirral have the lowest levels (9%).

Figure 20: Qualifications Profile, 2015

Halton

Knowsle

y

Liverp

ool

Sefton

St. Hele

ns

West L

anca

shire

Wirral

FEMA

North W

est

United

King

dom

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

22% 23%31% 31% 26%

33% 32% 29% 33% 37%

24% 22%19% 22%

22%23% 22%

21%21%

20%

24%21%

18%21%

23%19% 21%

20% 18% 16%

14%11% 11%

11% 12% 9% 13%12% 12% 11%

7%7% 8%

6% 6% 6% 4%6% 7% 7%

9%16% 14% 9% 12% 10% 9% 11% 10% 9%

% with no qualifications (NVQ)

% with other qualifications (NVQ)

% with NVQ1

% with NVQ2

% with NVQ3

% with NVQ4


4.64 Table 10 shows the percentage point change in the qualifications profile since 2005. This shows

that across the FEMA, generally the levels of qualifications are rising. The proportions of the

population with NVQ4 (Bachelor’s degree), NVQ3 (A level), and NVQ2 (GCSE grade A*-C) has

grown while the number with NVQ1 (GCSE grade D-G) and no qualifications have fallen.

4.65 In the FEMA, the proportion of people with NVQ4 level qualifications has grown by 7.6 percentage

points since 2005. This is lower than the North West (8.5%) and UK (10.4%) growth. However, in

Liverpool growth exceeded the UK level (10.7%).

4.66 The FEMA also saw a 1.3 percentage point growth in the level of persons with NVQ3 level

qualifications, while the regional and national trends were negative. For NVQ2 level qualifications,

the FEMA saw a growth of 3.5 percentage points compared to more modest growth regionally (1.8

percentage points) and nationally (0.4 percentage points).

4.67 Across the FEMA there has been a decline in the number of people whose highest qualification is

NVQ1, with the percentage dropping by 3.2 percentage points – higher than the North West or the



UK. The proportion of people with no qualifications in the FEMA dropped by 9.3 percentage points –

a notably larger drop than seen across the North West or the UK.

Table 10:Highest Qualifications, Change 2005-2015

% with NVQ4

% with NVQ3

% with NVQ2

% with NVQ1

% with other qualification

s

% with no qualification

sHalton 3.6% 4.9% 6.8% -5.9% 1.4% -10.8%

Knowsley 8.4% 0.7% 4.3% -5.4% 0.5% -8.6%

Liverpool 10.7% 1.1% 2.0% -2.4% 0.5% -12.0%

Sefton 6.5% 0.7% 3.3% -3.0% -0.3% -7.2%

St. Helens 4.7% 2.7% 7.2% -4.2% -1.0% -9.4%

West Lancs 1.6% 3.7% 0.9% -5.6% 2.5% -3.1%

Wirral 8.6% -0.2% 3.1% -1.1% -1.2% -9.2%

FEMA 7.6% 1.3% 3.5% -3.2% 0.1% -9.3%

North West 8.5% -0.2% 1.8% -3.1% 0.3% -7.4%

UK 10.4% -0.3% 0.4% -2.8% -1.9% -5.8%


4.68 Analysis of the commuting flows across the City Region8, at local authority level, is shown in Figures

21 and 22. Figure 21 shows the residents commuter analysis. This shows the main destinations of

commuters for each local authority who live in that area but whose main workplace is in another

authority. This shows a complex commuting pattern across the City Region. The biggest flows

(shown in red in Figure 21) are:

Sefton to Liverpool – with a flow of 24,200 persons; Knowsley to Liverpool – 19,700 persons; Wirral to Liverpool – 18,100 persons; Liverpool to Knowsley – 11,500 persons; Liverpool to Sefton – 11,500 persons; Wirral to Cheshire West and Chester – 10,200 persons.

4.69 The flows clearly point to the City’s economic influence stretching beyond its boundaries into

surrounding areas. The majority of the flows are between the authorities within the FEMA, however

Figure 21 also shows outflow to authorities beyond the FEMA, most notably: Wirral to Cheshire

West and Chester (10,200 persons); St. Helens to Warrington (6,800 persons); and Halton to

Warrington (5,800 persons).

8 Further analysis of commuting patterns is included in the Defining the HMA and FEMA Report.



Figure 21: Travel to Work Data – Residents Analysis

Source: 2011 Census

4.70 Figure 22 shows the workplace commuter analysis. This shows the main origins for commuters who

work in each local authority but who live in another authority. As with the residents’ commuter

analysis, the workplace analysis shows the strong flows between Liverpool and Sefton, Liverpool

and Knowsley, and Liverpool and Wirral.

4.71 In addition to the flows within the FEMA, Figure 22 also shows inflow from authorities beyond the

FEMA, most notably: Cheshire West and Chester to Wirral (6,100 persons); and Wigan to St.

Helens (5,800 persons).



Figure 22: Travel to Work Data – Workplace Analysis

Source: 2011 Census



4.72

The City Region’s Economy – Key Points

The FEMA’s economy is significant in size, accounting for annual output of £30 billion and a fifth of the North’s West’s GVA. Historically it has grown in size by 2.0% pa. Employment growth historically has been relatively modest, increasing by just 23,600 since 1991.

Growth in jobs has been driven in particular by increasing employment in the health; professional, scientific and technical, admin and support, and education sectors. However the overall rate of employment growth has been moderated by sectors which have historically seen contracting employment – particularly manufacturing, but also finance and insurance; public administration; and construction.

There are some structural challenges relating in particular to high public sector employment, an overall deficit of jobs and a weaker (but improving) skills profile relative to other parts of the country. If the jobs density across the FEMA was to match the national average, there would need to be 133,000 more jobs. Public sector employment is particularly high in Liverpool, Sefton and Wirral.

Manufacturing employment, which has declined significantly over recent decades, appears to have turned a corner with recent growth in a number of sectors including automotive; pharmaceuticals; rubber and plastics; and non-metallic minerals. However productivity improvements moving forwards are likely to limit overall jobs growth in the sector. The manufacturing sector is largest in comparative terms in Halton, Knowsley, St Helens and West Lancashire.

Economic participation is influenced by a range of factors, including the availability of employment. Across the FEMA the employment rate is a substantial 6 percentage points below that nationally (and 3.4 pp below the North West). The highest unemployment is in Liverpool, St Helens and Knowsley. There is considerable potential to improve economic participation.

Enterprise, measured by the density of small businesses and self-employment, could be stronger. Only West Lancashire has a level of self-employment which exceeds the national average.

Liverpool, at the heart of the City Region, in particular offers the potential for higher value-added service sector growth. It functions now as the economic heart of the FEMA, and supports significant in-commuting to work (as do most successful cities).



5 COMMERCIAL PROPERTY MARKET

5.1 This section provides an assessment of the office and industrial property market in the FEMA. This

assessment has been undertaken using a variety of sources including take-up and availability data

from Estate Gazette’s EGi database and CoStar commercial property database, a review of the

latest commercial property literature and stakeholder/property agents’ consultation.

National Economic Conditions

5.2 The Office for Budget Responsibility (OBR) published its Economic and Fiscal Outlook in March

2016. In the short time since the November 2015 forecast, economic developments have

disappointed and the outlook for the economy and the public finances looks materially weaker. It

should be noted that the March 2016 forecasts predated the Brexit vote.

5.3 Commodity prices, stock markets, and bond yields have fallen sharply. The oil price assumption is

36% lower in dollar terms than OBR’s previous forecast (published November 2015) and equity

prices are almost 8% lower. The economy is now shown to have lost momentum through 2015,

despite the boost from the fall in the oil price since late 2014. Nationally, GDP growth in 2015 (full

year estimate) is now estimated at 2.2%, while GDP Growth in 2016 is forecast at 2.1%.

5.4 Whole economy prices (as measured by growth in the GDP deflator) have also been much weaker

than expected. As a result, nominal GDP growth in the third and fourth quarters of 2015 was

significantly lower than expected: just 0.4%, against OBR’s forecast of 1.8%. This was due to net

trade and private investment being weaker than expected.

5.5 With real GDP only growing modestly at the end of last year, but employment and total hours

growing strongly, productivity fell sharply. Output per hour fell by 1.2% in the fourth quarter. That fall

has reversed almost all the productivity growth seen in the first three quarters of 2015.

5.6 OBR’s latest forecasts also saw them revise down their estimates of potential productivity growth,

which in turn reduces the sustainable level of GDP and the forecast for GDP growth over the next

five years. The outlook for productivity growth is both the most important and the most uncertain

judgement in most economic forecasts. The pick-up in productivity growth in mid-2015 seemed to

corroborate the expectation that the post-crisis drag on productivity growth would ease as the

financial system returned to full health. However, the fall in output in the fourth quarter of 2015 has

resulted in the OBR revising down the estimate of productivity growth so that it remains somewhat

below its pre-crisis average.

5.7 OBR estimates that the UK economy was running about 0.3% below potential in the final quarter of

2015. Taken together with lower potential output growth, that has led to the real GDP growth



downwards. OBR expected in March 2016 growth to average 2.1% a year over the next five years,

down from 2.4% in their previous forecast.

The Impact of Brexit

5.8 This report was under preparation at the time of the Brexit referendum. GL Hearn’s experience is

that the impacts of the Brexit vote in May 2016 were felt before this date, including in respect of

weaker investment. Clearly the result itself will have an impact on the national and local

economies. However, the full impact will only be fully understood once the negotiated position of

the UK and EU relationship is finalised.

5.9 In the short term, the weakening of the pound could result in benefits for the manufacturing industry

(especially those looking to export). However this is potentially outweighed by restricted investment

within commercial enterprises caused by the wider uncertainty.

5.10 Oxford Economics have undertaken some research as to what the potential impacts could be (prior

to the exit vote). This work looked at nine different scenarios based on alternative assumptions

about the trade relationship that could be eventually negotiated between the UK and the EU (for

example deals similar to the Norway option, Swiss option, or Turkish option). Moreover

consideration was given to the UK Government’s potential reaction to the new-found policy freedom

– taking account of the impact of regulatory, migration and fiscal policy choices on economic

conditions.

5.11 The best case scenario still sees a 0.1% decline in GDP in real terms compared to a baseline of

continued EU membership. The worst-case scenario is associated with a decline of almost 4% in

real time GDP compared to a baseline of continued EU membership.

5.12 In summary, the Oxford Economics scenarios all have a number of commonalities:

Whichever trade settlement is adopted and whichever scenario comes to pass, there will be a long-term structural impact on the UK and EU economies.

Across the board, all scenarios show a degree of trade reduction in which UK trade volumes fall as a share of GDP. This reflects the increased cost of trade between the UK and the EU, which encourages firms in both the UK and the rest of the EU towards domestically-produced goods.

The boost to net trade from a weaker pound is expected to be more than offset by a slowdown in consumer spending growth and a decline in business investment.

Employment levels fall as cautious firms cut back on hiring. Employment levels are 1.3% below the base case by the end of the 2022.

The post-referendum forecast shows a strong increase in GDP growth after 2019. This assumes aggressive action from the Bank of England’s Monetary Policy Committee and fiscal support aided by the scrapping of the current goal of a budget surplus by 2019-20 – an approach supported by the Prime Minister.



5.13 In general, the industrial sectors (excluding mining and quarrying) are at greatest risk. This is

particularly the case in relation to the manufacturing and construction sectors who are expecting to

face the largest impact. The service sector is also likely to be impacted with the financial services

industry most at risk.

5.14 It should however be noted that while none of the scenarios provide positive news for post-Brexit

economic growth, the forecast impacts currently are relatively modest compared to the previous

recession following the ‘credit crunch’ in 2008.

Commercial Floorspace

5.15 The latest Valuation Office Agency data (from 2012) shows that there is a total of 16,700,000 sq m

of business floorspace across the FEMA. This is broken down as 2,100,000 sq m of office space,

10,000,000 sq m of industrial space, 3,500,000 sq m of retail space, and 1,100,000 sq m of ‘other’

space.

5.16 The authority with the largest quantum of business floorspace is Liverpool with 4,900,000 sq m.

Liverpool has the highest amount of floorspace for each type: 50% of the FEMA’s office floorspace;

22% of total industrial space; 37% of retail space; and 32% of other business space is in Liverpool.

5.17 Beyond Liverpool, there is most office space in Sefton (15% of FEMA total), followed by Halton

(11%) and Wirral (10%). For industrial space, St. Helens has the greatest quantum with 16% while

Halton and Knowsley have 14% and West Lancashire has 13%.

Figure 23: Total Business Floorspace

Halton Knowsley Liverpool Sefton St. Helens Wirral West Lancashire0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Sq m

(000

s)



Source: Valuation Office Agency, 2012

Office Market Review

5.18 At national level, the office market performed strongly in 2015. According to Knight Frank, the total

take-up for the top ten cities in the country at the end of October 2015 accounted for 460,000 sq m,

which is the highest total figure since 2010. The rental level remained stable during the last quarter

across the country.

5.19 Nationally, the office market was expected to continue the strong performance of 2015 into 2016,

and the main regional cities are expected to exceed their long-term average take-up at the end of

2016, according to Savills’ Regional Office Market Spotlight (February 2016).

5.20 Cushman & Wakefield’s Office Market Snapshot for the first quarter of 2016 suggests that despite

the uncertainty surrounding the EU referendum, solid economic growth was anticipated for 2016 as

a whole. A number of factors support this outlook, including consumer demand, improvement in

income levels, wage growth and further expansion in the labour market. The property market

remains generally positive, albeit that sentiment has moderated.

5.21 Occupier demand may fall modestly in the short-term as a result of the Brexit vote and occupiers

putting back investment decisions, however there is limited hard evidence as of yet.

Office Market Review in Liverpool City Region FEMA

5.22 This section provides an assessment of the office market in the FEMA. This information is taken

from EGi and CoStar databases (quantitative analysis) which collate information provided by

commercial agents as well as by contacting commercial property agents (qualitative analysis).

5.23 With regards to the quantitative data it should be noted that although these are the most

comprehensive lists available, some transactions may not have been recorded. However this is

unlikely to impact on the overall picture or conclusions drawn from this. GL Hearn used the

Geographic Information System analysis to accurately present the analysis at a local authority level.

5.24 For the qualitative analysis, GL Hearn have also consulted commercial agents operating within the

FEMA authorities. This analysis is presented in the last subsection of this chapter and should be

read alongside the quantitative analysis.

5.25 Figure 24 provides an overview of the location of take-up activity over the period of 2000-2016. In

total 2,625 deals were listed for the FEMA covering 1,700,000 sq m floorspace. The authority with

the largest total quantum of transacted space was Liverpool which totalled around 1.4 million sq m

since 2000; followed by Sefton at 116,000 sq m.



Figure 24: Office Floorspace take-up, 2000-2016

Source: GL Hearn Analysis of EGi & CoStar Data

5.26 Figure 25 shows the number of deals by authority over the 10 year period to 2015. In total 2,211

deals have been recorded in the FEMA over the period 2005-15. An average of over 200 office

deals have been recorded each year, with the strongest activity in 2015.

5.27 Liverpool saw the highest office floorspace take-up with an annual average take-up of 84,000 sq.m.

By comparison, the other authorities’ combined annual average take-up was 34,500 sq m.

5.28 Figure 25 shows the trend in office deals by size band over the period 2005 to 2015. This shows a

notable increase in overall transactions since 2012. The majority of transactions (63%) involved

trading smaller office spaces, usually below 185 sq m in area. An increase in take-up since 2012

has been seen across a range of different size bands, however overall take-up growth has been

driven by rising take-up of larger units of over 1,000 sq m as Figure 25 shows.



Figure 25: Profile of Office Deals by Size, 2005-2015

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 201550

100

150

200

250

300

350

1,000+ sqm500-1,000 sqm185-500 sqmLess than185 sqmTr

ansa

ctio

ns


Figure 26: Take-Up of Office Floorspace by Size across FEMA, 2005-15

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

50,000

100,000

150,000

200,000

250,000

1,000+ sqm500-1,000 sqm185-500 sqmLess than185 sqm

Floo

rspa

ce (S

q m

)




Office Availability

5.29 There is around a total of 470,000 sq m office space advertised in the area across 910 properties.

More than the half (53%) is located within Liverpool City. Figure 28 illustrates the location of

available office space across the FEMA as advertised on the EGi and CoStar databases in August

2016. This includes new builds (or new refurbishments), properties under construction, proposed

spaces that are currently in design process and existing office spaces9.

5.30 Figure 27 sets out the distribution of the advertised space across the seven authorities. The majority

is concentrated in Liverpool followed by Sefton (13%), Wirral (10%), Halton (9%) and Knowsley

(8%). In West Lancashire the advertised space is around 9,000 sq m (2%)

Figure 27: Office Availability (July 2016)

Liverp

ool

Halton

Knowsle

ySeft

on

St Hele

ns

West L

ancs

Wirral

-

50,000

100,000

150,000

200,000

250,000

3,000+ sqm

1,000-3,000 sqm

500-1,000 sqm

185-500 sqm

Less than 185 sqm

Floo

rspa

ce(s

q m

)


5.31 Figure 28 overleaf shows the location of available office floorspace across the FEMA.

9 This data is not directly comparable with the office floorspace data shown in Figure 23 which includes only built floorspace.



Figure 28: Office Availability – July 2016


5.32 Three quarters of the advertised stock relates to existing/ second-hand premises. There is 53,500

sq m of space which is either refurbished or under-construction; together with 56,000 sq m available

on a design and build basis.

5.33 In Liverpool where the majority of the office stock is concentrated, the new-build or recently

refurbished space relates to 18% of the City’s advertised stock. The vast majority (68%) of the

space is second-hand, while around 10% relates to proposed space (on a design and build basis).

5.34 Figure 29 shows the status of the proposed stock for each authority. Around 64% of Knowsley’s

advertised stock is on a design and build basis. It should be noted that this space is related to

Coopers Point, Coopers Lane scheme with an opportunity up to 23,000 sq m (250,000 sq ft).



Figure 29: Office availability by type and location (July 2016)

Liverp

ool

Halton

Knowsle

y

Sefton

St Helen

s

Wirr

al

Wes

t Lanc

ashire

0

50,000

100,000

150,000

200,000

250,000

Design & Build

Under Construc-tion

Reburbished Grade A

Existing Grade B

Sq m


5.35 More than a quarter of the advertised stock relates to premises above 3,000 sq m, followed closely

by premises between 1,000 and 3,000 sq m. Figure 30 shows the availability categorised by size

band and status. Small units, below 185 sq m, equates to only 9% of the total available floorspace.

Figure 30: Floorspace availability by office status (July 2016)

Less

than 1

85 sq

m

185-5

00 sq

m

500-

1,000

sqm

1,000-

3,000 s

qm

3000+

sqm

0

20,000

40,000

60,000

80,000

100,000

120,000

Design & Build

Under Construc-tion

Reburbished Grade A

Existing Grade B

Sq

m


5.36 The large second hand office floorspace in Liverpool is a major component of the available supply.



5.37 The total available floorspace equates to 4.2 years’ supply across the FEMA. This is calculated by

using notional year’s supply, which is the sum of the total available office space divided by the

average annual take-up. Availability is significant in Knowsley, but this is influenced by design & build

opportunities (which will create Grade A floorspace). The tight supply of office spec in Liverpool is

evident.

Table 11:Notional Years’ Supply of Office Floorspace Notional Years' Supply

Liverpool 3.1Halton 4.9Knowsley 10.6Sefton 6.3St. Helens 6.6Wirral 10.1West Lancs 7.5FEMA 4.2


Industrial Market Review

5.38 Nationally, the industrial market continues to perform well with year-on-year increases in the take-

up of floorspace, although the latest full year figures for the UK show that total take-up in 2015 was

down 11% on 2014 figures. Typically industrial floorspace includes both B2 and B8 use classes.

5.39 The industrial sector continues to be dominated by the warehouse and distribution uses. There is a

growing demand for large scale logistics/ distribution warehouses nationally. This is, in part, driven

by the continuing growth of the on-line retail sector and increasing customer expectations for same-

or next-day delivery.

5.40 At a national level, Jones Lang LaSalle (JLL) statistics for the big box logistics sector indicate

aggregate take-up across the UK of 7.7m sq m (89.3m sq ft) of which 5.7m sq m (61.5m sq ft) were

in units of a size 90 to 9,000 sq m (1,000 to 99,999 sq ft). The composition of demand by sector for

the first half of the year (nationally) was:

Retailers: 49% Logistics Companies: 28% Manufacturers: 12% Other: 11%

5.41 At the national level, JLL’s research points to a current supply of 18.5m sq m (198.2m sq ft) at the

end of 2015 – a low level equivalent to just under one years’ worth of stock. This is partly a

reflection of a lack of development over recent years, related to the wider economic conditions.



Industrial market in the FEMA

5.42 Figure 31 profiles the spatial distribution of the industrial transactions across FEMA since 2000.

Since 2000 there have been recorded 4,032 industrial deals relating to 5.8 million sq m floorspace.

Our analysis focuses on trends over the last decade (since 2005), for which more reliable data is

available.

5.43 Over the last decade (2005-2015) there have been 3,629 industrial deals recorded across the

FEMA relating to 4.6 million sq m of industrial floorspace.

Figure 31: Industrial transactions 2000-2016


5.44 The highest concentration of industrial transactions has been recorded in Liverpool City (943 deals)

followed by Wirral (731 deals). Floorspace take-up was highest in Halton, at over 1 million sq.m

over the 2005-15 period, followed by Knowsley (957,000 sq m) and Liverpool (941,000 sq m).

Halton in particular has seen a higher number of deals for larger units.



Figure 32: Industrial deals in FEMA by size and year, 2005-15

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

50

100

150

200

250

300

350

400

450

500

100,000+ sqm50,000-100,000 sqm10,000-50,000 sqm1,000-10,000 sqm500-1,000 sqmLess than500 sqm

Tran

sact

ions


5.45 Figure 33 presents the number of industrial deals by size and year. On average 330 deals were

recorded per annum in FEMA. In total 68% of all the deals related to less than 500 sq m unit

floorspace between 2005 and 2015, while 12% related to 500-1,000 sq m units and 18% to 1,000-

10,000 sq m/unit. Deals for units above 10,000 sq m equal 2% of the total.

Figure 33: Industrial deals in FEMA by year and local authority, 2005-15

Liverpool CC

Halton BC Knowsley C

Sefton C St Helens C

Wirral West Lancs BC

-

100

200

300

400

500

600

700

800

900

1,000 2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

Tran

sact

ions




5.46 Figure 34 presents the deal numbers broken down by year and local authority for the period

between 2005 and 2015. Liverpool City accommodated the highest proportion of industrial

transactions (26%), followed by Wirral (20%). The lowest number of transactions was recorded in

West Lancashire (6%) and Halton (10%).

5.47 Figure 34 presents the industrial floorspace take-up by year for the same period. Halton Borough

saw the highest volume of floorspace take-up in the FEMA (23%), followed by Liverpool and

Knowsley (21% for both authorities). A lower proportion of floorspace was taken-up in West

Lancashire (4%) and St Helens (8%).

Figure 34: Take-up of Industrial floorspace by year and local authority, 2005-15

Liverpool CC

Halton BC Knowsley C

Sefton C St Helens C

Wirral West Lancs BC

-

200,000

400,000

600,000

800,000

1,000,000 2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

Floo

rspa

ce (S

q m

)


5.48 Figure 35 presents the industrial floorspace purchased per annum and size. 37% of the total

floorspace purchased the last decade were related to units of 10,000-50,000 sq m in size, followed

by 36% of units sized between 1,000 and 10,000 sq m. Units above 100,000sq m equated to only to

3% of the transacted floorspace. Other size bands vary between 7% and 8% of transactions.



Figure 35: Take-up of Industrial floorspace by year and size, 2005-15

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 -

100,000

200,000

300,000

400,000

500,000

600,000

100,000+ sqm

50,000-100,000 sqm

10,000-50,000 sqm

1,000-10,000 sqm

500-1,000 sqm

Less than500 sqm

Floo

rspa

ce (S

q m

)


5.49 The highest industrial take-up was recorded in 2015 at above 550,000 sq m, followed by 2006 with

approximately 544,000 sq m and 2014 with 540,000sq m.

Industrial Floorspace Availability

5.50 As of August 2016, there was 1.9 million sq m industrial floorspace available and 926 properties

being actively marketed on either EGi or CoStar across the FEMA. More than 10% of the advertised

stock relates to units above 50,000 sq m. Almost half of the advertised properties have a space

between 1,000 and 10,000 sq m. Finally one third relates to stock with 10,000-50,000 sq m

floorspace (Figure 36).



Figure 36: Industrial floorspace availability by unit size and status (July 2016)

Less

than

500

sqm

500-1

,000

sqm

1,00

0-10,0

00 sq

m

10,0

00-5

0,000

sqm

50,0

00+

sqm

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

Design

Under Construc-tion

New - Refurb

Existing

Floo

rspa

ce (s

q m

)


5.51 The map in Figure 37 shows the spatial distribution of the advertised industrial floorspace across

the FEMA as registered on EGi and CoStar databases in August 2016. The highest concentration of

the available floorspace can be observed in Liverpool (337,000 sq m) followed closely by Halton

(336,000 sq m), Knowsley (312,000 sq m) and Wirral (288,000 sq m). The availability in Sefton and

West Lancashire is around 12% while the advertised stock in St Helens represents 6% of the total

availability.



Figure 37: Industrial floorspace availability by size in FEMA, July 2016


5.52 Around a quarter of the advertised properties in Halton and Knowsley related to space above

50,000 sq m. 46% of the availability in Liverpool relates to premises between 1,000 sq m and

10,000 sq m space, followed by 37% of premises with 10,000-50,000 sq m floorspace as illustrated

in Figure 38. 62% of the advertised stock in West Lancashire relates to properties above 10,000 sq

m floorspace.



Figure 38: Industrial floorspace availability by size band, August 2016

Liverpool Halton Knowsley Sefton St Helens Wirral West Lancashire

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

50,000+ sqm10,000-50,000 sqm1,000-10,000 sqm500-1,000 sqmLess than 500 sqm

Floo

rspa

ce (s

q m

)


5.53 Figure 39 presents the available industrial floorspace by status and local authority. As at August

2016, a third of the available stock was available on a design and build basis and 63% (1.2 million

sq m) was existing units. In addition 4% (69,000 sq m) was under construction and 4% (approx.

70,000 sq m) was newly built or refurbished.

Figure 39: Available Industrial floorspace by status and local authority (August 2016)

Liverp

ool

Halton

Knowsle

y

Sefton

St Hele

nsW

irral

Wes

t Lan

cash

ire -

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Design & Build

Under Construc-tion

Reburbished Floorspace

Existing Floorspace

Floo

rspa

ce (s

q m

)




5.54 The largest advertised industrial floorspace was the built to suit opportunity in Viking Park (formerly

3MG), Halton with 79,000 sq m available space. The largest existing advertised space was a unit in

Hawthorne Road, Sefton of 39,000 sq m. There are 53,000 sq m new or refurbished floorspace

across 13 units above 1,000 sq m. Design and build opportunities are available for up to 537,000

sq.m of industrial floorspace of which there is capacity for up to 450,000 sq m in units of over

10,000 sq m and153,000 sq m in units of over 50,000 sq m.

Property Agents’ Consultation

5.55 As part of the commercial property market assessment, GL Hearn contacted property agents active

within the FEMA. Consultation was undertaken in August 2016. The responses and key findings of

those discussions are summarised below. The purpose of this is to complement the findings of the

quantitative analysis.

Office Market

5.56 According to the agents’ consultation, Liverpool City is the main market for office activity in the

FEMA. Demand varies across Liverpool, with most popular locations being the City Centre and City

Fringe, along the waterfront, as well as out of town locations in Speke and around Liverpool Airport.

The majority of the transactions and floorspace take-up in recent years has been focussed in the

‘Commercial District’ – comprising central Liverpool and the Waterfront.

5.57 Agents’ consultation revealed moderate activity across the office market over the past few months.

The majority of the transactions (60-70%) involved letting small office spaces (with a total

floorspace below 250 sq m).

5.58 The level of rental values varies across the area and relates to the type of the office space. In

general, the values were quite consistent over the last few years, with figures across the

Commercial District of around £20 per sq ft for a Grade A office space and £15- £16 for a Grade B

unit. This can be compared to around £11 per sq ft outside the Commercial District, with the highest

values achieved in Wavertree (£13.00 per sq ft). North of Liverpool is quite consistent, with Grade B

office space transacted around £11- £11.50 per sq ft.

5.59 The majority of the stock transacted over the last year was Grade B office space, with almost 50%

being related to professional and finance/ banking industry. New offices accounted for a very small

proportion of the stock transacted over the past year.

5.60 Almost half of the last year’s total take-up of in the City Centre areas accounts for public sector,

driven by Liverpool City Council occupying 85,000 sq ft in the Cunard Building.



5.61 Further to that, a significant number of recognised City Centre office buildings have been sold within

the last 18 months for residential conversions and several for hotel conversions. This has resulted

in a shortage of Grade B offices in the City Centre.

Industrial/Warehouse Market

5.62 According to the agents’ consultation the industrial demand is high, with the most popular locations

being in locations with good access to the strategic road network and in proximity to the Port. In

particular, properties with a good road network access, parking facilities and loading/unloading

facilities are considered to be the most desirable across the existing industrial stock.

5.63 Rental activity remained stable over the past few months with the average values across

Merseyside around £5- £6 per sq ft. An average time to let the property is approximately 10-12

months, but with potentially longer void periods for larger units.

5.64 The demand for large industrial warehouses or storage facilities is driven by expansion or relocation

of existing local occupiers, together with inward investment. Inward investment mainly involves units

above 3,000 sq m. Local companies usually target units below 3,000 sq m while larger companies

have a recently raised interest in the last few months to establish their operating bases in the area.

There is a recognised shortage of land capable of accommodating larger warehouses.

5.65 There is recognition that the opening of Liverpool2 and other developments related to the SuperPort

concept will drive increased demand for warehouse and distribution space across the City Region.

In particular, this will likely drive demand for large scale units in locations with good access to the

port and to the motorway network. Agents reported that there is currently a limited supply of such

sites across the City Region.

5.66 With limited development over recent years, availability has fallen reducing the choice of premises

for occupiers. Available stock has also been influenced by residential redevelopment of some sites.

Most new development now takes place on a design and build or pre-let basis.

5.67 Industrial development across the FEMA has historically been supported by European Grants and

external funding. In the wake of the referendum to leave the European Union, agents indicated that

an additional layer of uncertainty has been added to the market.

5.68 Jaguar Land Rover, located at Halewood, has increasing land requirements and this has knock on

effects on the company’s supply chain – companies such as Johnson Controls, Plastics Omnium

and other big suppliers. There is demand for large sites in proximity to JLR’s Halewood site but the

lack of land has driven potential occupiers to look further afield – for example, to Warrington.



5.69 Agents report that in Halton, Knowsley, South Sefton, and St Helens there is similar activity in the

industrial market to the levels seen in Liverpool. These areas benefit from relatively close proximity

to the Port and good access to the motorway network. The rental values in these areas are between

£5 to £6 per sq ft. Wirral has also increased activity mainly because of its proximity to the port and

the good links with both the City and the Motorway network.

5.70 Areas like North Sefton and West Lancashire are slightly further from strategic transport

accessibility – these areas are outside the 1 hour travel time from the port – and as such the

demand for industrial/logistics activity in the area is more limited and focussed on smaller local

needs. This is reflected in rental values and development activity in these areas.

Property Market – Key Points

The property market analysis particularly highlights that the office market is dominated by Liverpool, and that supply is tight for both Grade A and B space at the time of writing.

There is a broader distribution of industrial demand, with the largest levels of stock being in St. Helens, followed by Knowsley and West Lancashire. Within the industrial sector there is a shortage of larger warehousing/ storage units, with demand for large sites to accommodate demand arising from the expansion of the Port and for large site close to or accessible from Jaguar Land Rover’s Halewood Plant.



6 FUTURE ECONOMIC GROWTH POTENTIAL

6.1 To estimate the future economic growth potential in the FEMA we have drawn on economic

forecasts produced by Oxford Economics and the Liverpool City Region Local Enterprise

Partnership (LEP). We consider two scenarios:

A Baseline Scenario; and A Growth Scenario.

6.2 The Baseline Scenario is based on Oxford Economics’ baseline model. It takes account of the

structure of local economies by sector, past sectoral performance and the outlook for different

economic sectors in 2016. The Growth Scenario is based on additional information provided by the

Liverpool City Region LEP and each of the FEMA local authorities. Liverpool City Region LEP

provided Oxford Economics with a set of growth ambitions and targets, centred on a number of

sectors that have been identified as having significant growth potential. In addition, local authority

officials responsible for regeneration in each local authority provided details on future development

projects and proposals for each respective area. This included information on time scales, likely

levels of employment, and the type of employment (office, retail, leisure, etc.) to be generated.

Using this information, the LEP and Oxford Economics have modelled a growth scenario which

assesses the potential economic impact. This is modelled on a sector by sector basis.

6.3 The Growth Scenario shows the FEMA’s economy growing substantially faster than the Baseline

forecast. GVA measures the size of a local economy in terms of the value of goods and services

produced. The Baseline shows an annual growth rate of 1.9%10 in GVA over the period 2012 to

2037. For the Growth Scenario this figure is 2.5% per annum. This compares to 2.0% pa GVA

growth historically in the City Region; and forecasts for 2.3% pa growth nationally and 2.0% pa for

the North West. Clearly, the Growth Scenario is considerably more optimistic than the Baseline.

10 Compound Annual Growth Rate (CAGR)



Figure 40: GVA – Baseline vs Growth Scenario

1991

1994

1997

2000

2003

2006

2009

2012

2015

2018

2021

2024

2027

2030

2033

2036

0

10,000

20,000

30,000

40,000

50,000

60,000

Baseline Scenario Growth Scenario

GVA

(£m

, 201

2 Pr

ices

)


6.4 The Baseline Scenario shows a total employment growth of 58,900 over the period 2012-37. The

Growth Scenario shows a higher growth of 134,100 jobs over this period together with a marked

improvement in productivity due to stronger growth in higher value-added sectors. The stronger

employment growth in the Growth Scenario is driven by a stronger performance over the period

from 2018 to 2025 than shown in the Baseline Scenario.

Figure 41: Total Employment – Baseline vs Growth Scenario

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

2037

600

650

700

750

800

850

900


Jobs

(000

s)




6.5 The Growth Scenario sees an extremely fast rate of jobs growth in the first ten years of the forecast

(1.1% growth pa), more than three times the pace of employment growth in the Baseline Scenario

and twice that expected across the North West. From 2026 onwards, the pace of growth slows to

0.3% pa but with the forecasts of stronger growth relative to the Baseline Scenario over this period.

6.6 Table 12 shows the total forecast employment growth of the two scenarios at local authority level.

This shows a considerably higher level of growth in Liverpool (which sees the strongest absolute

increase in jobs) as well as strong growth in St. Helens, and Halton. Knowsley and West Lancashire

show the smallest difference in total employment growth between the two scenarios. However, it

should be noted that these two authorities were forecast the second and third highest growth in the

Baseline scenario.

Table 12:Total Employment Growth – 2012-37Baseline Scenario Growth Scenario Difference

Halton 3,800 12,400 8,600Knowsley 9,000 12,300 3,300Liverpool 28,700 67,600 38,900Sefton 2,500 6,500 4,000St. Helens 3,200 17,100 13,900Wirral 5,800 11,400 5,600West Lancashire 6,000 6,800 800FEMA 58,900 134,100 75,200


6.7 Figures 42 and 43 show the total jobs growth in the Baseline and the Growth Scenario by authority.



Figure 42: Total Employment Growth by Authority – Baseline

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

2037

0

50

100

150

200

250

300

350

Halton Knowsley Liverpool Sefton St Helens WirralWest Lancashire

Jobs

(000

s)


Figure 43: Total Employment Growth by Authority – Growth Scenario

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

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Halton Knowsley Liverpool Sefton St Helens Wirral

West Lancashire

Jobs

(000

s)




6.8 Employment growth in the two scenarios, expressed as a Compound Annual Growth Rate, is shown

in the table below. This shows that in the Baseline Scenario, the FEMA’s economy is expected to

grow by an average of 0.3% pa compared to 0.5% across the North West and 0.6% nationally

(2012-37). In the Growth Scenario, substantially stronger employment growth of 0.7% pa is

expected, out-performing the rate of growth envisaged at either a regional or national level. In the

Growth Scenario, the strongest comparative employment growth rates are expected in Liverpool

and St Helens. For these authorities in particular, the Growth Scenario is quite aspirational in

nature.

Table 13:Compound Annual Employment Growth Forecast, 2012-37 Baseline Scenario Growth Scenario

Halton 0.0% 0.7%Knowsley 0.5% 0.7%Liverpool 0.4% 1.0%Sefton 0.1% 0.3%St Helens 0.2% 0.9%Wirral 0.2% 0.4%West Lancs 0.4% 0.5%FEMA 0.3% 0.7%North West 0.5%UK 0.6%


6.9 The above figures are for total employment and include both full-time and part-time jobs (both are

treated equally in the analysis). Different sectors will have different levels of full-time and part-time

employment. For the sectoral analysis, in order to ensure we are considering comparable data, we

convert the total jobs growth to Full-Time Equivalent (FTE) jobs. The FTE jobs growth for each

authority is shown in the table below11.

Table 14:Full-Time Equivalent (FTE) Jobs Growth – 2012-37Baseline Scenario Growth Scenario Difference



11 Note: In some instances the FTE growth is higher than the total employment growth due to structural changes to the economy over the period. FTE jobs are an output of the Oxford Economics model.



6.10 Tables 15 and 16 on the following pages show the FTE jobs growth over the period 2012-37 by

broad sector and authority. In terms of sectoral growth, at the FEMA level the Baseline Scenario

shows the biggest growth in the following sectors:

Professional and scientific services (19,400 FTE jobs growth); Construction (13,300 FTE jobs growth); Health (9,900 FTE jobs growth); Business Support Services (9,000 FTE jobs growth); Accommodation and Food Services (7,100 FTE jobs growth).

6.11 Conversely, the Baseline Scenario shows large losses in Public administration and defence (-9,700

FTE jobs loss) and Manufacturing (-7,400 FTE jobs loss) as well as smaller net losses in Utilities;

Transport, warehouse and postal; and Media and IT.

6.12 The Growth Scenario shows strong growth in the same growth sectors listed above as well as

strong performance in the Wholesale and retail trade sector. Professional and scientific services

(42,800 FTE jobs growth) is still considered to see the largest growth, together with Construction

(13,800 FTE jobs growth) and Business Support Services (18,700 FTE jobs growth) forecast the

largest growth at FEMA level.

6.13 The Growth Scenario shows fewer sectors with net losses of FTE jobs over the period – only the

Public Administration and Defence (-9,000 FTE jobs loss), Utilities (-1,000 FTE jobs loss), and the

Manufacturing (-1,200) sectors are forecasts net losses. The manufacturing sector is however

expected to perform substantially better than it has historically, or in the Baseline Scenario.

6.14 The Growth Scenario shows considerably stronger growth in a number of sectors, most notably in

the Professional and Scientific Service sector which is forecast to see the largest level of growth

(42,800 FTE jobs) which is 121% more than the Baseline Scenario. The other sector to see the

biggest increase in the Growth Scenario is Business Support Services which is shown more than

twice the growth of the Baseline Scenario. This will support demand for B1 employment space.



Figure 44: FTE Jobs Growth by Broad Sector, FEMA – Baseline vs Growth Scenario

Other

Health

Public Administration and Defence

Professional and Scientific Services

Accommodation and Food Services

Wholesale and Retail Trade

Utilities

Agriculture and Mining

-10,000 0 10,000 20,000 30,000 40,000 50,000


FTE Jobs Growth 2012-37




Table 15:Full-Time Equivalent (FTE) Jobs Growth by Broad Sector, 2012-37 – Baseline ScenarioHalton Knowsley Liverpool Sefton St Helens Wirral West Lancs FEMA

Agriculture and Mining 0 0 0 0 0 -100 -100 -200Manufacturing -1,700 -300 -1,500 -1,000 -1,700 0 -1,300 -7,400Utilities 0 -200 -300 0 -100 -200 -300 -1,000Construction 1,300 900 4,300 1,500 1,200 2,500 1,600 13,300Wholesale and Retail Trade 0 100 6,200 -900 800 -700 700 6,300Transport, Warehouse and Postal -700 600 200 -500 -200 -400 -400 -1,500Accommodation and Food Services 400 0 4,700 400 500 200 900 7,100Media and IT 500 200 -2,200 200 -300 200 100 -1,300Professional and Scientific Services 1,500 1,500 8,900 1,700 800 3,200 1,800 19,400Business Support Services 1,800 2,100 3,800 900 -300 500 200 9,000Public Administration and Defence -200 -700 -4,400 -2,600 -700 -1,100 0 -9,700Education 100 900 500 500 0 -1,600 100 600Health 0 3,200 800 500 1,400 2,600 1,500 9,900Creative and Recreation 300 300 800 400 500 600 200 3,200Other 100 400 1,900 1,000 700 1,000 200 5,200Total 3,500 8,900 23,600 2,200 2,700 6,600 5,300 52,800



Table 16:Full-Time Equivalent (FTE) Jobs Growth by Broad Sector, 2012-37 – Growth ScenarioHalton Knowsley Liverpool Sefton St Helens Wirral West Lancs FEMA

Agriculture and Mining 0 0 0 0 100 -100 0 -100Manufacturing -1,300 600 -1,400 -1,000 2,400 700 -1,300 -1,200Utilities 0 -200 -300 0 0 -200 -300 -1,000Construction 1,300 900 4,500 1,600 1,300 2,500 1,700 13,800Wholesale and Retail Trade 300 400 8,400 -700 1,400 0 1,000 10,900Transport, Warehouse and Postal -600 1,000 800 300 6,900 -300 -300 7,800Accommodation and Food Services 700 0 6,600 500 800 400 900 9,900Media and IT 2,000 300 1,100 400 -300 400 100 4,100Professional and Scientific Services 4,300 2,000 25,800 2,900 1,100 4,800 1,900 42,800Business Support Services 3,800 2,600 9,800 1,300 -100 1,100 200 18,700Public Administration and Defence -200 -600 -4,100 -2,500 -600 -1,100 0 -9,000Education 300 1,000 1,300 600 100 -1,500 200 2,000Health 100 3,400 1,700 700 1,500 2,800 1,600 11,600Creative and Recreation 300 300 1,200 400 600 600 200 3,800Other 100 400 2,200 1,000 700 1,100 300 5,700Total 11,200 11,900 57,600 5,700 15,800 11,500 6,000 119,700



Future Economic Growth Potential – Key Points

Baseline, trend-based economic forecasts expect the FEMA’s economy to grow by 1.9% pa (GVA, 2012-37), with employment growth of 58,900 (0.3% pa). The strongest employment growth is in professional and scientific services, construction, health and business support; with employment in public administration and manufacturing falling.

A Growth Scenario, taking account of planned investments and policy aspirations, is expected to see the economy grow by 2.5% pa (2012-37), with improvements in productivity and total employment growth of 134,100 jobs (0.7% pa). A range of sectors are expected to perform more strongly including professional and scientific services, construction and business support; as well as wholesale and retail trade, and manufacturing. In the Growth Scenario, the FEMA outperforms forecast GVA and employment growth at a regional and national level.

The forecasts are principally based on analysis and trends which pre-dates the UK’s decision to leave the European Union. In the short-term this could have a downwards impact on economic performance; however over the longer-term the impact is less clear and there is clearly increased uncertainty regarding longer-term economic performance.



7 TREND-BASED DEMOGRAPHIC PROJECTIONS

7.1 In this section consideration is given to demographic evidence of housing need and trend-based

projections. Planning Practice Guidance sets out that ‘household projections published by [CLG]

should provide the starting point estimate of overall housing need’12. The CLG projections are

directly linked to ONS Sub-National Population Projections (SNPP). The PPG outlines that ‘the

household projections… are statistically robust and are based on nationally consistent

assumptions’13.

7.2 However, the PPG also identifies [2a-014] that ‘establishing future need for housing is not an exact

science. No single approach will provide a definitive answer’ and in 2a-017 notes that ‘plan makers

may consider sensitivity testing, specific to their local circumstances.’ The PPG also notes that [2a-

016] that ‘where possible, local needs assessments should be informed by the latest available data’

such as ONS Mid-Year Population Estimates.

7.3 A Technical Advice Note prepared for the Planning Advisory Service (PAS)14 provides additional

guidance on sensitivity testing, and in particular advises that using a longer (10- to 15-year) past

trend analysis should provide a more robust projection than the SNPP (which uses data from the

previous 5-6 years). The PAS Technical Advice Note also highlights the issue of Unattributable

Population Change (UPC) – UPC is an adjustment made by ONS for discrepancies between

Census data and annual monitoring. The PAS Note sets out (para 6.35) that ‘plan makers may take

a view that the UPC, or part of it, should be included in the base period as past migration’.

7.4 On the basis of the wording in both the PPG and the PAS Technical Advice Note a number of

observations can be made which are relevant to the assessment of trend-based demographic

projections:

CLG household projections (which link to ONS population projections) are consistent and technically robust and should be used as the ‘starting point’ for assessing housing need;

These projections can be sensitivity tested where there is evidence of other changes over time (e.g. short-term changes to migration patterns) or where UPC may be related to recorded migration levels; and

Up-to-date information should be used where possible and this will include later releases of ONS mid-year population estimates (MYE).

7.5 Clearly in undertaking sensitivity analyses to demographic projections, demographic growth can go

up as well as down. In particular it should be borne in mind that the latest (2014-based) official

projections are based on trends over the previous 5-6 year period (2008/9 – 2014) which included

an economic recession and sustained downturn in the housing market. One of the impacts of this 12 ID: 2a-016-2015022713 ID: 2a-018-2014030614 PAS (July 2016) Objectively Assessed Need and Housing Targets – Technical Advice Note



has been stronger relative population growth in urban areas since 2008, with a reduced trend of

out-migration from such locations (which is likely to be linked to factors such as mortgage finance

constraints). This has meant that more suburban or rural local authorities have typically seen lower

levels of population growth than previously.

7.6 In understanding what a reasonable projection is a number of factors can be considered. In

particular, this would include overlaying past and projected population growth (to see if there is a

correlation) and also to compare past and projected levels of migration. It is important to recognise

that migration is likely however to change over time as the age structure of the population changes

and with economic circumstances.

7.7 Overall, it is clear that developing the most reasonable and realistic projections for housing need is

far from straightforward and will involve a degree of professional judgement. The need for judgment

can clearly be seen in a recent High Court case in Kings Lynn (CO/914/2015) where it is noted that

‘this is a statistical exercise involving a range of relevant data for which there is no one set

methodology, but which will involve elements of judgment about trends and the interpretation and

application of the empirical material available’.

7.8 In the Liverpool City Region (LCR), the impact of students on population growth and housing need

is also important. Overall, it would be fair to say that LCR is one of the more complex areas in

demographic terms, with a range of issues needing to be considered when forming a view about

housing need. The remainder of this section seeks to follow a logical process although the number

of potential variables involved makes it difficult to be definitive.

7.9 Assessing housing need essentially contains two components. Firstly, there are population

projections. ONS publishes population projections every two years (the subnational population

projections (SNPP)) as well as providing an annual estimate of population change (by age and sex)

– the mid-year population estimates (MYE). Secondly, population figures are converted into

estimates of the number of households by CLG in their household projections (again issued every

two years). The analysis which follows therefore initially concentrates on population data, before

moving on to look at household growth.

7.10 A number of analyses to follow draw on data published by ONS in its components of population

change series. This data is provided in more detail (and for each area) in Appendix B. This

Appendix also contains the full range of outputs at a HMA and local authority level.



2014-based Subnational Population Projections (SNPP)

7.11 The latest SNPP were published by ONS on the 29th May 2016. They replaced the 2012-based

projections. Subnational population projections provide estimates of the future population of local

authorities, assuming a continuation of recent local trends in fertility, mortality and migration which

are constrained to the assumptions made for the 2014-based national population projections. The

new SNPP are largely based on trends in the 2009-14 period (2008-14 for international migration

trends).

7.12 The 2014-based SNPP are not forecasts and do not attempt to predict the impact that future

government or local policies, changing economic circumstances or other factors might have on

demographic behaviour. Their primary purpose is to provide an estimate of the future size and age

structure of the population of local authorities in England. These are used as a common framework

for informing local-level policy and planning in a number of different fields as they are produced in a

consistent way.

7.13 GL Hearn’s interrogation of the SNPP concludes that these represent sound trend-based

demographic projections from a technical perspective. However they are projections based on

short-term trends (i.e. trends over the past 5-6 years) and therefore can be influenced by short-term

changes to population growth and migration. In line with the PPG, there is however a strong

justification for ‘rebasing’ the projections to take account of ONS Mid-Year Population Projections,

as the PPG advises, given that there is actual data on population change between 2014 and 2015,

and it is therefore not necessary to predict what happened.

CORE CONCLUSION 1: 2014-BASED SNPP

The 2014-based SNPP is a sound population projection in terms of the methodology employed by ONS. It is however limited by the fact that it is based on short-term trends. 2015 ONS Mid-Year Population Estimates have been released and it is therefore not necessary to project population growth 2014-15.

7.14 Two initial projections are therefore presented: firstly using the SNPP as published, and secondly by

using the SNPP but rebasing the projections to use the 2015 Mid-Year Estimates. Post 2015, this

latter projection uses the birth and death rates in the SNPP along with the actual levels of migration.

For convenience, the two projections have been named as:

2014-based SNPP Rebased 2014-based SNPP

7.15 Tables 17 and 18 show projected population growth from 2012 to 2037 in the Liverpool City Region

(together with West Lancs) and the two HMAs under these two initial scenarios. The data shows



that the population of the study area is projected to increase by about 131,600 people (7.2%) in the

SNPP. When updated for MYE, this figure increases slightly (to 135,700, 7.4%), reflecting a higher

level of population growth in the 2014-15 period than had been projected within the Liverpool HMA,

within the Mid Mersey HMA the population growth for this period was slightly lower than projected.

Table 17:Projected population growth (2012-2037) – 2014-based SNPPPopulation

2012Population

2037Change in population % change

Mid Mersey HMA 505,458 551,478 46,020 9.1%Liverpool HMA 1,320,477 1,406,053 85,576 6.5%Liverpool City Region (+WL) 1,825,935 1,957,531 131,596 7.2%Source: Derived from ONS data

Table 18:Projected population growth (2012-2037) – Rebased 2014-based SNPP Population

2012Population


Mid Mersey 505,458 551,179 45,721 9.0%Liverpool HMA 1,320,477 1,410,495 90,018 6.8%Liverpool City Region (+ WL) 1,825,935 1,961,673 135,738 7.4%Source: Derived from ONS data

Potential Recessionary Impacts

7.16 It is typical in assessments of this nature to consider if there have been any fundamental changes to

the population pre- and post-recession (mid-2008 being taken as the cut off point for convenience

with national data such as the SNPP and MYE). Since the recession, many urban areas have seen

stronger population growth, mainly as a result of changing migration patterns from such areas to

more suburban or rural locations. Against this context it is appropriate to consider and interrogate

longer-term trends, and consider migration trends pre- and post-recession.

7.17 Tables 19 and 20 show net migration in the 2001-8 period and compares this with similar data for

the 2008-15 period. Trends over a seven year period either side of the onset of recession is

considered. The analysis shows some changes in migration since 2008. In the Mid-Mersey HMA,

average net migration post-2008 is some 455 people per annum higher with the difference mainly

being attributable to internal migration (i.e. migration from elsewhere within the UK). In the Liverpool

HMA, the difference is more significant with net migration being some 3,100 people higher on

average since 2008. The impact is particularly significant for Liverpool.

7.18 More detailed analysis for local authorities (see Appendix B) identifies that post-2008 net migration

has been higher in all of the local authorities apart from West Lancashire. Liverpool has seen the

most significant difference between pre- and post-2008 data (average net migration increasing by

over 1,800 per annum) although there are also notable differences in Wirral and Sefton (both

increasing by about 600 people on average).



Table 19:Pre- and post-recession migration averages (per annum) – Mid-Mersey HMA Internal net International net Total net

2001-8 176 235 4112008-15 502 363 865Post 2008 change 326 128 455

Source: ONS

Table 20:Pre- and post-recession migration averages (per annum) – Liverpool HMAInternal net International net Total net

2001-8 -2,589 1,128 -1,4612008-15 -1,447 3,088 1,641Post 2008 change 1,142 1,959 3,102Source: ONS

CORE CONCLUSION 2: RECESSIONARY IMPACTS

Given the difference between pre- and post-recession migration trends, it is reasonable to model alternatives to the SNPP which take account of longer-term migration trends.

7.19 To provide a sensitivity analysis, a longer-term migration trend scenario is modelled, which

considers trends over the 14-year period to 2015 (i.e. 2001-15). A 14-year period is chosen

because it is the longest time period for which reasonable quality information is available, as well as

being a period where roughly half is before and half after the onset of recession. This is thus a

relatively stable period for analysis.

7.20 Whilst a projection for 14-years has been used, an alternative has also been developed to consider

migration trends over the past 10-years (2005-15). This is a fairly standard scenario projection

within housing need research. For the two HMAs, the longer-term (14-year) projection may be more

robust given the potential impact of the recession. However, the 10-year projection does have the

advantage of post-dating a major demographic change experience in the Country (expansion of the

European Union in 2004).


and the two HMAs under these two scenarios.

7.22 The data shows that the population across the two HMAs is projected to increase by about 116,036

people (6.4%) with 10-year migration trends. When using a longer (14-year) based period, this

figure decreases (to 104,700 – 5.7%), reflecting a lower level of migration between 2001-5. Both of

these figures are lower than either of the 2014- SNPP based scenarios.



Table 21:Projected population growth (2012-2037) – 10-year migrationPopulation

2012Population


Mid Mersey 505,458 554,131 48,673 9.6%Liverpool HMA 1,320,477 1,387,840 67,363 5.1%Liverpool City Region 1,825,935 1,941,971 116,036 6.4%Source: Derived from ONS data

Table 22:Projected population growth (2012-2037) – 14-year migrationPopulation

2012Population



Unattributable Population Change

7.23 As well as looking at migration, the analysis can consider the impact of Unattributable Population

Change (UPC). UPC is an adjustment made by ONS to mid-year population estimates where

Census data has suggested that population growth had either been over- or under-estimated in the

inter-Census years. Because UPC links back to Census data, figures are only available in the 2001-

11 period.

7.24 ONS notes that there are two main causes for UPC; the first is errors in the recording of population

in the Census (either in 2001, 2011 or both) or errors in the recording of migration. This is important,

if the errors are in relation to past migration then forward projections based on that data are likely to

be inaccurate.

7.25 Table 23 sets out the total level of UPC in each area over the 2001-11 period. Across the whole

LCR, UPC can be seen to be positive by a total of 23,000 people (2,300 per annum). This means

that if the UPC were to entirely be due to errors in migration recording, then migration has on

average been under-estimated by 2,300 people per annum – this is a fairly significant amount. The

table also shows that Liverpool has by far the most significant level of UPC although the figure in

Wirral is also high. Despite the large positive level of UPC across the City Region, it is notable that

five of the eight authorities actually have a negative UPC.



Table 23:Unattributable Population Change (UPC) by local authority (2001-11)Total UPC (2001-11) Per annum

Halton 5,691 569Knowsley -3,649 -365Liverpool 20,598 2,060Sefton -2,106 -211St.Helens -4,035 -404Warrington -1,091 -109West Lancashire -1,780 -178Wirral 9,386 939Mid-Mersey 565 57Liverpool HMA 22,449 2,245LCR 23,014 2,301Source: ONS

7.26 Overall, the levels of UPC are sufficiently large to merit further sensitivity projections to be carried

out. However, as previously noted, it is not entirely clear what ‘Unattributable Population Change’

(UPC) is related to, with the main possibilities being a mis-recording of migration and/or errors in

population counts within Census data.

7.27 In Liverpool (the main area for UPC) there is good evidence that the 2001 Census may have under-

estimated the population, with an ONS Report in 2004 entitled Local Authority Studies – Analysis of

data and evidence for Liverpool showing a potential discrepancy of about 15,000 people (see Table

7.1).15 Whilst at the time ONS concluded that there was no evidence of an under-count, it does

seem plausible that there was, given that the 2011 Census now seems to be indicating that some

20,000 people were subsequently ‘missed’ through the ONS annual monitoring of population

dynamics.

7.28 For Liverpool it is reasonable to conclude based on ONS’ own analysis that a significant component

of the UPC is likely to relate to a census under-count in 2001. This will not therefore have impacted

on the components of population change (and thus forward projections). For other authorities there

is a lack of clear evidence on which to draw concrete conclusions.

7.29 Given the significance of UPC across the study area, two sensitivity projections have been

developed. These look at ‘correcting’ migration for UPC in the years where UPC arises. The

adjustments have been made to projections that look at trends over the past 10- and 14-years.

Whilst these projections look at a full UPC adjustment, in drawing conclusions it is considered that

the range between adjusted (for UPC) and unadjusted projections should be used to inform a

reasonable level of population and household growth when considering long-term migration trends.

15 http://www.ons.gov.uk/ons/guide-method/method-quality/specific/population-and-migration/pop-ests/local-authority-population-studies/local-authority-studies/liverpool.pdf


http://www.ons.gov.uk/ons/guide-method/method-quality/specific/population-and-migration/pop-ests/local-authority-population-studies/local-authority-studies/liverpool.pdf

http://www.ons.gov.uk/ons/guide-method/method-quality/specific/population-and-migration/pop-ests/local-authority-population-studies/local-authority-studies/liverpool.pdf


7.30 It should be noted that the UPC adjustments have only been made to longer-term projections

scenarios (e.g. no adjustments are proposed to the SNPP which typically looks at short-term

trends). This is because ONS has improved its methodology for recording migration, which means

that data during the later period of the 2001-11 decade is likely to be of a better quality. It is the data

over these latter years which has fed into the latest official (2014-based) SNPP and hence any

adjustments to these are less likely to be justified.

CORE CONCLUSION 3: UNATTRIBUTABLE POPULATION CHANGE (UPC)

Given the difference in the significance of UPC in the City Region, it is reasonable to model alternative long-term scenarios to take account of this. However, any UPC adjustment should a) be treated with caution, b) only be applied to longer-term trend based projections and c) outputs should be considered alongside equivalent unadjusted projections in the form of a range.

7.31 To therefore appraise the potential impact of UPC, two additional projections have been developed;

these are based on looking at migration trends over the past 10- and 14- years, but with an

additional adjustment for UPC in the years and locations in which it arises. These projections have

been named as:

10-year migration (+UPC) 14-year migration (+UPC)


and the two HMAs under these two scenarios.

7.33 The data shows that the population of LCR is projected to increase by about 150,800-152,200

people (8.3%). This percentage increase is above that shown in the SNPP and also with longer-

term trends and without a UPC adjustment.

Table 24:Projected population growth (2012-2037) – 10-year migration (+UPC)Population

2012Population





Table 25:Projected population growth (2012-2037) – 14-year migration (+UPC)Population

2012Population



7.34 As noted previously, given the uncertainties about UPC, it is better to express any needs as a range

of outputs from no UPC adjustment to a 100% UPC allowance. Alternatively, and for the purposes

of comparison a midpoint between these figures can be considered. The midpoint of the two 10-

year based projections is population growth of 7.3% (across the LCR), whilst the 14-year

projections show a figure of 7.0%. These compare with figures in the SNPP 7.2%-7.4% depending

on whether or not the MYE is included.

7.35 On balance, the various projections all point towards a similar level of population growth across the City Region (something in the range of 7.0%-7.4%). However, the projections do all have a different spatial distribution. This point is considered in more detail later in this section.

Household Formation Rates

7.36 Having studied the population size and the age/sex profile of the population the next step in the

process is to convert this information into estimates of the number of households in the area. To do

this the concept of headship rates is used. Headship rates can be described in their most simple

terms as the number of people who are counted as heads of households (or in this case the more

widely used Household Reference Person (HRP)).

7.37 On the 12th July 2016, CLG published a new set of (2014-based) household projections – the

projections contain two core analyses. The Stage 1 household projections project household

formation based on data from the 1971, 1981, 1991, 2001 and 2011 Censuses with outputs for age,

sex and marital status. The Stage 2 household projections consider household types and the

methodology report accompanying the projections is clear that these projections are based on just

two data points – from the 2001 and 2011 Census. Overall outputs on total household growth are

constrained to the totals from the Stage 1 Projections. This means that both sets of projections

show the same level of overall household growth (when set against the last set of SNPP) but some

of the age specific assumptions differ. Differences can however occur between the Stage 1 and 2

headship rates when modelled against different population projections (due to differences in the age

structure).

7.38 Overall, it is considered that the Stage 1 projections should be favoured over the Stage 2 figures for

the purposes of considering overall household growth; this is for two key reasons: a) the Stage 1



figures are based on a long-term time series (dating back to 1971 and using 5 Census data points)

whereas the Stage 2 figures only look at two data points (2001 and 2011) and b) the Stage 2 figures

are constrained back to Stage 1 values, essentially meaning that it is the Stage 1 figures that drive

overall estimates of household growth in the CLG household projections themselves. The analysis

to follow therefore focuses on Stage 1 figures.

7.39 Figure 45 shows how Stage 1 figures differ for different age groups. The graphs show the

proportion of persons in each age cohort who are the head of a household and how this proportion

has changed over time since 1991.

7.40 It is evident from the analysis that household formation amongst households in their late 20s and

early 30s fell slightly over the 2001-11 decade. The projections however anticipate that household

formation rates for this age group will increase moving forwards. The 2014-based household

projections also expect household formation rates amongst older age groups to fall over time. Given

improving life expectancy this ‘trend’ looks to be reasonable (as it would be expected that more

people would remain living as couples).



Figure 45: Projected household formation rates by age of head of household – Liverpool City Region

15-24 25-34

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

2037

0

0.05

0.1

0.15

0.2

LCR North West

England

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

2037

0.35

0.4

0.45

0.5

0.55

LCR North West

England

35-44 45-54

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

2037

0.45

0.5

0.55

0.6

0.65

LCR North West

England

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

2037

0.5

0.55

0.6

0.65

0.7

LCR North West

England

55-64 65-74

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

2037

0.5

0.55

0.6

0.65

0.7

LCR North West

England

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

2037

0.55

0.6

0.65

0.7

0.75

LCR North West

England

75-84 85 and over

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

2037

0.65

0.7

0.75

0.8

0.85

LCR North West

England

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

2037

0.75

0.8

0.85

0.9

0.95

LCR North West

England

Source: Derived from CLG data



Critical Review of 2014-based Headship Rates

7.41 The headship rates in the 2014-based CLG household projections should not be used uncritically.

Paragraph 2a-015 of the PPG is clear that the ‘household projection-based estimate of housing

need may require adjustment to reflect factors affecting local demography and household formation

rates which are not captured in past trends’.

7.42 There are a number of issues to consider here. Firstly it is important to understand that the official

projections are trend-based. It is important to interrogate whether there is evidence that household

formation rates have been supressed. However in doing so it should be borne in mind that there are

a range of factors – including societal changes – which have influenced household formation; and

that in parts of the City Region there has been evidence of low demand for housing and market

failure historically (which is likely to have influenced household formation trends).

7.43 It is not straightforward to precisely determine if the projections contain any level of suppression

(either in the past or projected forward) given that household formation rates can be influenced by a

range of factors. Research by the late Alan Holmans for the Town and Country Planning

Association (TCPA) identified that nationally:

‘The working assumption in this study is that a considerable part but not all of the 375,000 shortfall of households relative to trend was due to the state of the economy and the housing market. 200,000 is attributed to over-projection of households due to the much larger proportion of recent immigrants in the population, whose household formation rates are lower than for the population as a whole. This effect will not be reversed. The other 175,000 is attributed to the economy and the state of the housing market and is assumed to gradually reverse’.16

7.44 Alan Holmans concluded that broadly half of changes to household formation are due to market

factors and about half due to international migration. Whilst the international migration impact is not

expected to change, any suppression as a result of the economy and housing market could improve

in the future.

7.45 More recent research by Ludi Simpson and Neil McDonald, and by Neil McDonald and Christine

Whitehead has considered these issues further. These research studies conclude that there is no

general basis for making adjustments to the household formation rates in 2012-based CLG

Household Projections.

7.46 For example, New estimates of housing requirements in England, 2012 to 2037 (Neil McDonald and

Christine Whitehead – TCPA – November 2015) states that:

‘The 2012-based projections, which use the 2011 Census and up-to-date population figures, are more immediately relevant and more strongly based than earlier estimates. The latest projections

16 Holmans, A. (2013) New estimates of housing demand and need in England, 2011 to 2031, TCPA.



can therefore be taken as a reasonable indication of what is likely to happen to household formation rates if recent trends continue. This is because, although economic growth might be expected to increase the household formation rate, there are both longer-term structural changes and other factors still in the pipeline (such as welfare reforms) that could offset any such increase’17

7.47 Whilst this 2015 research refers to the 2012-based projections, the household formation rates in the

2014-based figures are almost identical. On the basis of the evidence available, it seems unlikely

that the 2014-based household formation rates include any degree of suppression and can

therefore realistically be used to assess levels of household growth when set against population

projections.

7.48 Set against this general conclusion, it is however relevant to consider the local evidence and

headship rates. When looking specifically at data for Liverpool City Region, it is clear that the only

age group where household formation fell between 2001-11 was for people aged 25-34. However

moving forward from 2011, the rate remains fairly flat. However, it is not clear if the changes in the

rates are due to market factors or due to the change in ethnic structure reflective of international

migration.

7.49 At a local level it is difficult to use international migration figures because of the way such migration

works: typically most international migrants start in a major city (e.g. Liverpool) and then filter out

into other areas (and hence are registered by ONS as an internal migrant). Hence one way to

consider the change in ethnic structure of the population is to consider changes to the Black and

Minority Ethnic (BME) population.

7.50 Table 26 shows changes to the BME population in each of the age groups for which headship rate

data is provided above. This analysis shows an increase in the BME population of 46,200 people

aged 15 and over in the 10-year period – a 99% increase. Some 36% of this increase was in the

age group 25-34. Table 27 shows the same information for the White (British/Irish) population. This

shows a lower change in population and a significant decline in the number of people aged 25-34

(and 35-44).

17 McDonald, N. and Whitehead, C. (2015) New estimates of housing requirements in England, 2012 to 2037, TCPA.



Table 26:Changes to Black and Minority Ethnic Population by age (2001-11) – Liverpool City Region

BME population 2001

BME population 2011 Change % of change

15-24 11,354 22,139 10,785 23.4%25-34 10,724 27,302 16,578 35.9%35-44 9,167 18,724 9,557 20.7%45-54 6,616 11,653 5,037 10.9%55-64 4,016 6,736 2,720 5.9%65-74 2,919 3,702 783 1.7%75-84 1,586 2,044 458 1.0%85+ 391 650 259 0.6%TOTAL 46,773 92,950 46,177 100.0%Source: Census (2001 and 2011)

Table 27:Changes to White (British/Irish) Population by age (2001-11) – Liverpool City Region

White (B/I) population 2001

White (B/I) population 2011 Change % of change

15-24 214,178 230,629 16,451 52.7%25-34 220,678 197,764 -22,914 -73.4%35-44 255,497 222,021 -33,476 -107.3%45-54 230,856 249,733 18,877 60.5%55-64 185,850 217,338 31,488 100.9%65-74 156,202 160,305 4,103 13.1%75-84 95,052 105,870 10,818 34.7%85+ 30,998 36,856 5,858 18.8%TOTAL 1,389,311 1,420,516 31,205 100.0%Source: Census (2001 and 2011)

7.51 From this it is clear that a major part of the changes in the headship rates of the 25-34 age group is

likely to be due to international migration and growth in BME communities. Given that moving

forward from 2011 the projections are expecting headship rates in this age group to stabilise; there

is no suggestion of any ‘suppression’ being built into the projections.

7.52 What is also notable is that the household formation rates of those aged 25-34 are notably above

that seen nationally; and are more positive than projections shown for the North West.

7.53 It is also useful to consider the 35-44 age group (noting that, for example, people aged 25-34 in

2011 with be aged 35-44 by 2021). The 35-44 age group shows little change in headship rates in

the past and continuing in the future: indeed trends are slightly upwards in the future. There is no

evidence of suppression in this age group either in the past or projected forward when looking at

trends across the city region.

7.54 GL Hearn has sought to analyse and consider the age-specific headship rates on an authority by

authority basis. This points to the potential for higher household formation rates amongst those

aged 25-34 and 35-44 in Halton and West Lancashire. The headship rates in these authorities have



therefore been adjusted based on tracking regional trends (by 5-year age group and sex). The

adjustments have been applied post-2014.

CORE CONCLUSION 4: HEADSHIP RATES

This section has provided a detailed interrogation of household formation rates. For Halton and West Lancashire there is local evidence that more positive household formation amongst those aged 25-34 and 35-44 would be a reasonable planning assumption.

Housing Need

7.55 The tables below bring together outputs in terms of household growth and housing need using the

headship rates discussed above and the full range of demographic scenarios developed. To convert

households into dwellings the data includes an uplift to take account of vacant / second homes. This

has been based on 2015 Council Tax data, with different rates being applied in each local authority.

The vacancy allowance is applied as an uplift to estimated household growth18. The figures used

are:

Halton – 1.6% Knowsley – 2.1% Liverpool – 2.9% Sefton – 3.6% St. Helens – 3.1% Warrington – 2.3% West Lancashire – 2.5% Wirral – 3.0%

7.56 The analysis shows an overall housing need for 4,735 dwellings per annum when using the 2014-

based SNPP as the underlying population projection, with a figure of 4,811 if MYE data for 2015 is

included.

7.57 With long-term (10-year) migration assumptions the housing need is shown to be for some 4,416

dwellings per annum (dpa), this figure decreases slightly (to 4,240) when the trend reference period

is extended to 14-years. With a UPC adjustment, the level of need increases to around 5,075

dwellings per annum. The midpoint of the two 10-year projections is for 4,745 dwellings per annum,

with the equivalent figure linked to 14-year trends being 4,658 dpa.

18 The uplift applied is a result of the relationship of dwellings/ households, rather than the % of total stock which is vacant.



Table 28:Projected housing need – range of demographic based scenarios and 2014-based headship rates – LCR (2012-37)

Households 2012

Households 2037

Change in households Per annum Dwellings

(per annum)2014-based SNPP 791,597 906,784 115,187 4,607 4,7352014-based SNPP (+MYE) 791,597 908,614 117,017 4,681 4,81110-year migration 791,597 899,047 107,449 4,298 4,41614-year migration 791,597 894,767 103,169 4,127 4,24010-year migration (+UPC) 791,597 915,070 123,473 4,939 5,07414-year migration (+UPC) 791,597 915,084 123,487 4,939 5,075

Source: Demographic projections

Local Authority Outputs

7.58 Table 29 brings together summarised figures for each local authority – the table shows annual

housing need under each of the six scenarios and shows the headship rate assumptions for Halton

and West Lancashire (over the 25-year period from 2012).

Table 29:Projected housing need – range of demographic based scenarios – by local authority (all figures per annum)

2014-based SNPP

2014-based SNPP

(+MYE)

10-year migration

14-year migration

10-year migration

(+UPC)

14-year migration

(+UPC)

Halton2014-headship 234 235 237 221 386 394Adjusted headship 254 254 257 241 408 416

Knowsley 2014-headship 266 280 321 300 211 180Liverpool 2014-headship 1,680 1,739 1,338 1,429 1,955 2,184Sefton 2014-headship 534 540 509 442 458 375St. Helens 2014-headship 415 416 390 368 281 245Warrington 2014-headship 765 762 834 745 802 711

West Lancashire

2014-headship 169 175 196 220 145 168Adjusted headship 193 200 221 246 170 193

Wirral 2014-headship 673 664 592 515 836 819Mid-Mersey HMA Adjusted headship 1,434 1,432 1,480 1,354 1,490 1,372

Liverpool HMA Adjusted headship 3,346 3,423 2,981 2,932 3,630 3,751

Total Adjusted headship 4,780 4,855 4,462 4,286 5,121 5,123

Source: Demographic projections

7.59 To avoid double counting, a consistent demographic projection needs to be used for the purposes

of drawing conclusions on the demographic need. The starting point is the 2014-based Household

Projections. Updating these to take account of the latest Mid-Year Population Estimates, as the

PPG advises, results in a need for 4,855 dpa (1,432 dpa in the Mid Mersey HMA; and 3,423 dpa in

the Liverpool HMA).



7.60 A 10 year migration scenario results in a need for between 4,462 – 5,121 dpa, with a need for

between 4,286 – 5,123 dpa shown based on 14-year migration trends. The SNPP sits centrally

within this range and thus appears to be a reasonable trend-based projection.

7.61 For the Mid Mersey HMA, the SNPP sits between the range shown based on 10 year migration

trends (1480 – 1490 dpa) and 14 year trends (1354 – 1372 dpa). For the Liverpool HMA it similarly

sits within the range shown by 10 year trends (2,981 – 3,630 dpa) and 14 year trends (2,932 –

3,751).

7.62 GL Hearn therefore conclude that the 2014 SNPP, adjusted for the Mid-Year Population Estimates,

provides an appropriate based conclusions on the demographic-based need. It should be noted that

in subsequent sections adjustments are made to support employment growth in both HMAs, and

therefore the selection of the appropriate demographic projections has a limited impact on the

overall conclusions on objectively assessed housing need.

Impact of Students on Population Growth and Housing Need

7.63 One question that often arises in areas with a notable student population is about the extent to

which student dynamics are driving population growth and hence housing need. This is not a simple

question to answer – whilst population projections do include students, they are not separately

identified from the general population.

7.64 Whilst all areas have some students, the vast majority are based in Liverpool, with a smaller

number in West Lancashire in particular. Hence the analysis to follow focusses on the City.

7.65 One way to look at the issue of students is to consider the age structure. The figure below shows

the age structure in Liverpool in 2001, 2015 and 2029 (this latter date has been selected so that

there is an equal gap (of 14-years) in the dates used in analysis). Projected information for 2029

has been taken from the 2014-based SNPP as published with data for 2001 and 2015 being taken

from mid-year population estimates.

7.66 The figure clearly shows an increase in the number of people of student age in the 2001-15 period –

with a peak at about age 20. Moving through to 2029, this peak is not projected to get any higher

and indeed there are projected to be some population losses in other age groups moving through

people in their 20s. Whilst this analysis is not conclusive, it would indicate that student growth

(which has been seen in the past) is not projected to continue in the future. The projections are

therefore not unduly influenced by student trends.



Figure 46: Liverpool City Age Structure (2001, 2015 and 2029)

0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78 81 84 87 90+0

2,000

4,000

6,000

8,000

10,000

12,000

2001 2015 2029

Source: ONS

7.67 A second way to look at this issue is to consider household types of younger households. From the

2014-based CLG household projections it is possible to consider households where the household

reference person is aged 15-24 (which would broadly correlate with the main student age groups).

Table 30 shows the estimated number of households in 2012 and 2037 in each of the household

types used by CLG.

7.68 This shows that the number of households aged 15-24 is projected to increase slightly over the

projection period. The key group in terms of students are the ‘other’ households, which will include

multiple unrelated adults living together. This category (which is by no means restricted to students)

is projected to increase by some 537 households over the 25-years – this is about 21 per annum.

Again, this analysis does not suggest that students are having a significant impact on the household

projections.



Table 30:Changes to household types – households aged 15-24 – Liverpool

Household types 2012 2037 Change % change

One person households: Male 2,927 4,721 1,794 61.3%One person households: Female 2,372 2,916 544 22.9%One family and no others: Couple: No dependent children 966 657 -309 -32.0%A couple and one or more other adults: No dependent children 191 63 -128 -67.0%Households with one dependent child 1,818 948 -870 -47.9%Households with two dependent children 496 187 -309 -62.3%Households with three dependent children 105 65 -40 -38.1%Other households 4,039 4,576 537 13.3%Total 12,915 14,132 1,217 9.4%Source: CLG 2014-based household projections

7.69 A similar analysis for West Lancashire highlights that between 2001 and 2015 the population aged

18-24 increased by 12,200 persons (42%), influenced by strong growth in the student population at

Edge Hill University. The ONS 2014-based demographic projections do not assume further growth,

indeed they assume a 7% fall in the population in these age groups through to 2029.

Figure 47: West Lancashire Age Structure (2001, 2015 and 2029)

0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 880

500

1,000

1,500

2,000

2,500

200120152029

Source: ONS

7.70 Analysis of the number of households aged 15-24 in the 2014-based CLG Household Projections

shows some growth in ‘other’ households, of around 15 per year; as well as some growth in couples

with one or more other adults.



Table 31:Changes to household types – households aged 15-34 – West Lancashire

2012 2037 Change % Change

One person households: Male 187 186 -1 -0.5%One person households: Female 109 31 -78 -71.6%One family and no others: Couple: No dependent children

176 203 27 15.3%

A couple and one or more other adults: No dependent children

56 102 46 82.1%

Households with one dependent child 362 304 -58 -16.0%Households with two dependent children 129 125 -4 -3.1%Households with three dependent children 34 77 43 126.5%Other households 442 815 373 84.4%Total 1496 1843 347 23.2%

Source: CLG 2014-based household projections

7.71 It should be borne in mind that the demographic projections (consistent to CLG’s methodology) hold

the institutional population aged under 75 constant in the forward projections. This means that the

inherent assumption within the modelling is that the population living in student halls of residence

remains constant. This issue and student housing needs are considered further in Section 10, later

in this report.

CORE CONCLUSION 5: STUDENTS

Liverpool City has a notable student population that could potentially impact on the population and household projections. However, the demographic projections contain limited additional growth from students (and student households) – both in Liverpool and West Lancashire - and so this cohort of the population is not unduly influencing local projection data.



8 HOUSING AND ECONOMIC GROWTH

8.1 In this section consideration is given to economic growth and how this may influence the level and

distribution of housing need within the two housing market areas.

8.2 The SHELMA uses the economics forecast scenarios prepared by Oxford Economics, specifically:

Baseline Scenario – a trend-based scenario which assumes that historical relationships between performance locally and at a regional/ national level hold true moving forwards; and

Growth Scenario – a more aspirational scenario which models the impacts of faster growth across key growth sectors across the Liverpool City Region combined with development/ regeneration projects and proposals in individual authorities.

8.3 The relationship between economic growth and housing need is complex, influenced by a number

of factors including:

The inter-relationship between jobs and people, recognising that some people hold down more than one job;

Levels of economic participation, with employment rates a function of a number of factors including the availability of jobs and skills;

Commuting patterns and ratios, which can influence the balance between residents in employment and jobs in an area. These are influenced by transport connections, investment, the availability of employment opportunities and earnings levels.

8.4 The complexity of these factors, coupled with the inevitable uncertainties associated with predicting

long-term economic performance, makes accurate modelling of the numbers of homes needed to

support future economic growth inherently difficult to accurately predict. However Planning Practice

Guidance requires consideration of the relationship between jobs growth and housing need.

8.5 The starting point for considering what housing provision may be required to support economic

growth is the expected growth in employment. Table 32 shows the total jobs growth envisaged in

the Baseline and Growth Scenarios.

Table 32:Total Employment Growth – 2012-37Baseline Scenario Growth Scenario Differential

Halton 3,800 12,400 8,600St Helens 3,200 17,100 13,900Warrington 27,900 28,800 900Mid Mersey HMA 34,900 58,300 23,400

Knowsley 9,000 12,300 3,300Liverpool 28,700 67,600 38,900Sefton 2,500 6,500 4,000West Lancashire 6,000 6,800 800Wirral 5,800 11,400 5,600Liverpool HMA 52,000 104,600 52,600




The basis of the forecasts and Strategic B8 allocations

8.6 The economic-led housing need is based on the labour demand scenarios (Baseline and Growth

Scenarios). It is a demand-based model which taken account of sectoral structure and past

performance in the Baseline Scenario; and in the case of the Growth Scenario, planned and

potential development/ regeneration projects and enhanced performance of LEP target sectors.

This means that there are elements of the Growth Scenario which are influenced by policy-based

factors.

8.7 The Growth Scenario takes into account existing available land/ sites for strategic B8 development,

as well as proposals such as the Parkside Strategic Rail Freight Interchange and other preferred

option sites in the case of St Helens district. However GL Hearn has not sought to prejudge future

decisions regarding the allocation of further land and where this spatially is located. Given the sub-

regional/ regional nature of demand in this sector, and the degree to which growth will be to some

degree ‘supply-led’ at a local authority level (with employment growth taking place in authorities

which allocate land at commercially attractive locations). These factors may in the future affect the

spatial distribution of growth within the FEMA in sectors such as land transport, warehousing and

postal, wholesale etc.

8.8 For the purposes of the SHELMA, it is however necessary to draw conclusions on objectively-

assessed housing need at this point. This has therefore been driven by existing concentrations and

past growth by sector, together with the understanding of current major sites with development

potential, and proposed/ potential sites within St Helens Borough.

8.9 GL Hearn considers that the Oxford Economics Growth Scenario captures the overall scale of

demand which is expected to arise from enhanced demand for large-scale B8 warehouse

development. Section 12 sets out the methodology for calculating the additional ‘Strategic B8’

floorspace need across the LCR. This comprises two components – a replacement build of 952,000

sq m, and a growth build of 638,000 sq m. The “growth build” element will result in around 8,000

additional permanent FTE jobs across the LCR by 2037 (based on a typical density of 80 sq.m per

FTE job). Through replacement build it is reasonable to expect some productivity improvements and

increased efficiencies which may influence job counts.

8.10 The Baseline Scenario shows a loss of 1,500 FTE jobs in the Transport, Warehouse and Postal

sector across the LCR by 203719, while the Growth Scenario shows a growth of 7,750 FTE jobs.

This means the Growth Scenario forecasts an additional 9,250 FTE jobs above the baseline in this

sector.

19 Note this will include some activities beyond those taking place in larger warehousing units



8.11 The Growth Scenario forecast includes a sufficient level of jobs growth, at LCR level, to support the

number of jobs expected to arise from the ‘Strategic B8’ growth. Furthermore, the Growth Scenario

forecasts a significant growth in Transport, Warehouse and Postal jobs will be in St Helens taking

account of potential future allocations. This aligns with the site supply analysis, which shows that St

Helens has the largest quantum of suitable land for ‘Strategic B8’ development.

8.12 Once policy decisions have been made regarding the distribution of further allocations for strategic

B8 development, it may be necessary to further consider or review the distribution of housing need.

This is considered further in Section 12.

Calculating the Housing Need to Support Economic Growth

8.13 The Oxford Economics model forecasts people-based employment by comparing the difference

between their modelled employment estimates for 2011 with information from the 2011 Census on

the number of people working in an area. A detailed interrogation of this data however reveals that

their modelling assumptions show a variance between people-based and workplace-based

employment. This variance ranges from 10% below the level of jobs in Warrington, to 3% above the

level of jobs in Wirral. Against this context, GL Hearn consider that an alternative source should

also be used to relate jobs to people; and we have instead sought to measure ‘double jobbing’ – the

proportion of people with more than one job – using data from the Annual Population Survey. We

have averaged data over the 2004-16 period to take account of the higher error margin associated

with individual years’ data at local authority level. The table below sets out the assumed levels of

double jobbing.

Table 33:Double Jobbing % Double Jobbing

Halton 2.5%St Helens 2.7%Warrington 3.1%Knowsley 2.2%Liverpool 2.7%Sefton 3.3%West Lancashire 3.4%Wirral 3.2%

8.14 The growth in labour supply which is necessary to support employment growth is also influenced by

commuting patterns. The SHELMA analysis points to notable commuting interactions between local

authorities across the City Region. There is clear potential over the 25 year period for commuting

patterns between authorities to change, influenced by transport investment; and locations of

housing and employment growth. Indeed the longer-term trend is of increasing commuting

distances.



8.15 It should be noted that the Oxford Economics model includes assumptions on changes in

commuting dynamics, influenced by trends and what the model expects the balance between labour

demand and supply to be in different areas. The reality is that it may be entirely reasonable to

expect an area which sees stronger growth in labour supply (than labour demand) to see an

increase in net out-commuting (and visa-versa). Moreover major employment centres typically draw

in labour from surrounding areas.

8.16 Changes in commuting dynamics however have potential cross-boundary implications (in that if one

authority assumes that net out-commuting falls, this would impact on other authorities). Therefore,

the standard modelling approach in technical assessments such as this is to assume that the

‘commuting ratio’ is held constant. This is to ensure the assessment is undertaken on a policy-off

basis. This means that the balance between the number of people living and working in an area

remains constant. Table 34 shows the current commuting ratio, based on 2011 Census data.

Table 34:Commuting RatiosWork in area Live in area Commuting ratio

Halton 57,638 57,771 1.00Knowsley 57,469 61,932 1.08Liverpool 236,934 197,457 0.83Sefton 103,528 122,709 1.19St Helens 65,252 78,862 1.21Warrington 115,466 101,235 0.88West Lancashire 49,881 52,045 1.04Wirral 112,947 140,681 1.25

Source: 2011 Census

8.17 Applying the double jobbing and commuting ratios to the forecast employment growth (shown in

Table 32) results in the following expected changes in the resident workforce over the 2012-37

period:

Table 35:Expected Changes in Resident Workforce, 2014-37 Baseline Growth Scenario

Additional jobs 2014-37

Change in resident

workforce

Additional jobs 2014-37

Change in resident

workforceHalton 4,608 4,502 13,273 12,970Knowsley 3,149 3,317 6,498 6,846Liverpool 23,231 18,842 62,106 50,373Sefton -1,349 -1,545 2,655 3,041St Helens 4,630 5,443 18,546 21,803Warrington 21,687 18,418 22,747 19,318West Lancashire 3,274 3,302 4,076 4,111Wirral 2,430 2,930 8,073 9,735



Mid-Mersey HMA 30,925 28,363 54,566 54,091Liverpool HMA 30,734 26,846 83,407 74,105Total 61,659 55,209 137,974 128,196

8.18 Next it is necessary to consider expected changes in the employment rate and economic

participation.

Economic Participation Assumptions for the Baseline Scenario

8.19 The Baseline forecast assumes ‘business as usual’ and thus it is reasonable to expect limited

changes in economic participation in this scenario; which sees relatively modest employment

growth relative to regional/ national trends. We have therefore modelled changes to employment

rates which take account of the expected impact of increasing state pension ages over the forecast

period along with some modest changes in other age groups. The detailed modelling assumptions

are set out in Appendix C.

8.20 These show small changes to the economically active population aged up to about 55 (including

reductions in activity rates for people aged 16-24 – partly linked to compulsory education to age 18).

Older age groups are modelled to see more notable increases in activity, which is linked to

pensionable age changes as well as a general trend for people to work longer (linked to improving

health and a general reduction in people’s pension availability). The rates of change for economic

activity are based on data provided by Experian at a national level, which has been modelled locally

based on activity rate data shown in the 2011 Census.

8.21 It is considered that the activity rate changes forecast by Experian are fairly realistic when set

against other factors (such as projected population growth and job forecasts at a national level).

Additional charts in the Appendix show a comparison of the assumed activity rates in LCR with

alternatives from Oxford Economics (OE) and the Office for Budget Responsibility (OBR). It can be

seen that the modelled rates typically sit somewhere in between these alternatives, reinforcing them

as realistic in a local context.

8.22 Figure 48 shows a comparison of the activity rate modelled herein based on our (Experian linked)

assumptions, to those from OE and also OBR. It should be noted that the OE figures are based on

an employment rate that has been rebased (in 2012) to be consistent with estimated economic

activity rates for the same period. The general trend will therefore hold true and a reasonable

comparison can be made.

8.23 Overall, the economic activity rates assumed in the Baseline Scenario show a very slight decline

from 2012 to 2037 – this is due to demographic change and an increasing proportion of older

people in the population. Whilst, the activity rates of older people are forecast to increase; it remains

the case that these will remain below those seen in other (younger) age groups.



Figure 48: Changes to Economic Activity Rates (Population Aged 16+) – Liverpool City Region (2012-37) – Baseline Scenario

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

50%

52%

54%

56%

58%

60%

62%

64%

66%

68%

70%

OE OBR Experian

Econ

omic

activ

ity ra

te (p

opula

tion

aged

16+

)

Source: Oxford Economics, OBR and Experian (rebased using 2011 Census data)

Economic Participation Assumptions in the Growth Scenario

8.24 As set out in Section 4, an analysis of the City Region’s economy shows relative low employment

rates compared to most wider benchmarks and comparable areas.

8.25 GL Hearn has assessed Oxford Economics’ assumptions (which assume notably stronger

improvements in economic participation in the Growth Scenario than the Baseline) and undertaken

further analysis of the potential for improvements in employment rates. Within the two HMAs, all

areas besides Warrington have an employment rate which is below the national average. The

greatest scope for improvement in the employment rate, as identified is in Liverpool and Knowsley.

The modelling for the Growth Scenario therefore assumes that the economic activity rate increases

above the baseline position and rises to half of the difference between the current rate and the

national average rate by the end of the forecast period. The detailed modelling assumptions are set

out in Appendix C.

8.26 Figure 49 shows how the economic activity rate (expressed as a rate of the total population aged

16+) is forecast to increase in this scenario. A comparison is also made with figures provided by

Oxford Economics (note there is no equivalent data from OBR). For the whole of the City Region it

can be seen that the assumptions used see some increase in the overall activity rate, although by

2037 the figure is still 2.7 percentage points below the figure within Oxford Economics own

forecasts.



Figure 49: Changes to Economic Activity Rates – Liverpool City Region (2012-37) – Scenario uplift

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

50%

52%

54%

56%

58%

60%

62%

64%

66%

68%

70%

Oxford Economics GL Hearn

Housing Need to Support Economic Growth

8.27 To calculate the housing need necessary to support employment growth, the employment rate

changes envisaged are inputted and migration adjusted (either upwards or downwards) to support

the necessary growth in labour supply. This recognises that both in- and out-migration of working-

age people can be influenced by the availability of employment.

8.28 The results are shown in Table 36. This applies adjusted headship rate identified in the

demographic analysis in the previous section. This shows the number of dwellings required across

the two HMAs to support the Baseline Scenario is 4,015 dpa. The Growth Scenario suggests a

need across the two HMAs of 6,122 dpa.



Table 36:Projected Economic-Driven Housing Need (Dwellings per Annum, 2012-37) Baseline Scenario Growth Scenario

Halton 326 565Knowsley 271 373Liverpool 862 1,791Sefton 454 587St Helens 397 855Warrington 949 973West Lancashire 221 241Wirral 536 737Mid Mersey HMA 1,671 2,393Liverpool HMA 2,343 3,729City Region (+Warrington+West Lancs) 4,015 6,122

8.29 Table 37 provides a comparison between the demographic-based dwelling requirement and the

economic-led dwelling requirement. In all local authorities and across both HMAs the economic-led

housing need in the Growth Scenario is greater than the demographic-based need. The economic-

led need in the Baseline Scenario is higher than the demographic need in Halton, Warrington and

West Lancashire.

Table 37:Comparison Between the Demographic-Based and the Economic-Led Dwelling Requirement (DPA, 2012-37)

Headship Assumptions

2014-based SNPP

Baseline Scenario

Growth Scenario

Halton Adjusted headship 254 326 565Knowsley 2014-headship 280 271 373Liverpool 2014-headship 1,739 862 1,791Sefton 2014-headship 540 454 587St Helens 2014-headship 416 397 855Warrington 2014-headship 762 949 973West Lancashire Adjusted headship 200 221 241Wirral 2014-headship 664 536 737Mid Mersey HMA 1,432 1,671 2,393

Liverpool HMA 3,152 2,343 3,729City Region (+WL) 4,584 4,015 6,122



Housing and Economic Growth – Key Points

To support the Baseline Economic Growth Scenario would imply a need for 2,343 homes pa across the Liverpool HMA, which is below the trend-based (2014-based) demographic projections. It would imply a need for 1,671 homes pa in the Mid Mersey HMA, which is 17% greater than the trend-based demographic projections. This is modelled assuming the commuting ratio remains constant and the employment rate 16+ falls modestly from 60.4% to 59.7% between 2012-37.

At a local authority level, the Baseline Economic Growth Scenario points to a higher level of housing need relative to the trend-based (2014-based) demographic projections in Halton, Warrington and West Lancashire.

The Growth Scenario results in a higher level of housing need in all areas, with a need for 2,393 dpa in the Mid Mersey HMA and 3,729 dpa in the Liverpool HMA (2012-37). This takes account of enhanced sector performance, planned/ potential development and regeneration projects; and assumes that half of the difference in economic participation between local authorities and that nationally is made up over the period to 2037.



9 AFFORDABILITY AND HOUSING MARKET SIGNALS

9.1 Planning Practice Guidance (PPG) on Housing and Economic Development Needs Assessments

sets out that the “market signals” should be considered to provide information on housing demand,

and the balance between supply and demand for market housing. The PPG outlines that:

“The housing need number suggested by household projections (the starting point) should be adjusted to reflect appropriate market signals, as well as other market indicators of the balance between the demand for and supply of dwellings. Prices or rents rising faster than the national/local average may well indicate particular market undersupply relative to demand.”

9.2 Relevant market signals are identified in the PPG, and are considered in this section. In addition

consideration is given to the need for affordable housing, drawing on existing affordable housing

needs evidence and recognising that there is a clear relationship between the affordability of market

housing and the need for affordable housing.

9.3 The analysis is geared at understanding housing market dynamics and considering if there is a

case for adjustment to overall housing provision to improve affordability. Its focus therefore

necessarily differs from how previous SHMA and related studies may have considered these

issues.

Land Values

9.4 CLG’s publication Land Value estimates for Policy Appraisal (Dec 2015) provide estimates of

residential land values (post planning permission) for local authorities in England. Land value

premiums provide direct intelligence on areas where there is a shortage of residential land.

9.5 As Figure 50 shows, land values across the local authorities in both housing market areas are

substantially below the national average. Residential land values in Liverpool are for instance 61%

below the national average (excluding London).

9.6 Halton is the only local authority where land values exceed the North West average (by 23%).

However there will be many areas within the region where land values exceed the average, and

values in Halton are 18% below the national average (excluding London).



Figure 50: Residential Land Values per Hectare, Dec 2015

Knowsley

Wirral

Liverpool

West Lancashire

St Helens

Sefton

Warrington

North West

Halton

England excl London

South East

£0

£500,000

£1,000,000

£1,500,000

£2,000,000

£2,500,000

£3,000,000

£3,500,000

£4,000,000

£380,000

£730,000

£815,000

£1,110,000

£1,245,000

£1,280,000

£1,340,000

£1,400,000

£1,725,000

£2,100,000

£3,600,000

Source: CLG Land Values for Policy Appraisal

House Price and Sales Trends

9.7 House prices provide information on the relative demand for housing in different areas. Figure 51

profiles median house prices in 2015. It illustrates a band of relatively low house prices stretching

along the M62 Corridor, and highlights that house prices across most of the main towns in both the

Liverpool and Mid Mersey HMAs fall below £125,000.

9.8 Within the Liverpool HMA, there are areas of higher house prices (> £175,000) on the western side

of Wirral; in Crosby, Formby and parts of Southport within Sefton; in Ormskirk and some rural parts

of West Lancashire; and in some neighbourhoods within South Liverpool. However within each of

these authorities, there are areas of both higher and lower house prices.



Figure 51: Median House Price Heat Map, 2015

Source: GLH Analysis of HMLR Price Paid Data

9.9 Median house prices across the Liverpool HMA are 33% below the national average and 3% below

the North West average. In the Mid Mersey HMA, prices are 32% below the national average, and

1% below the regional average.

9.10 An analysis of median house prices at a local authority level indicates that it is in West Lancashire,

Warrington, Sefton and Wirral where prices are above the North West average, and only in West

Lancashire to any significant degree. Median house prices in Liverpool, Knowsley and St Helens

are more than 15% below the regional average.

9.11 Lower quartile (LQ) house prices across all of the authorities considered are below the national

average. LQ prices are above the regional average in West Lancashire (28% higher), Warrington

(19% higher), and to a lesser extent Sefton and Wirral, as shown in Table 38.



Table 38:Median and Lower Quartile House Prices, 2015

Median, 2015 Differential to North West

Lower Quartile, 2015

Differential to North West

Halton £127,000 -9% £86,375 -11%St Helens £117,000 -16% £78,000 -20%Warrington £160,000 14% £115,000 19%Mid Mersey HMA £139,046 -1%

Knowsley £115,000 -18% £79,000 -19%Liverpool £118,250 -16% £77,000 -21%Sefton £148,250 6% £110,000 13%West Lancashire £167,000 19% £123,750 28%Wirral £142,500 2% £104,000 7%Liverpool HMA £135,499 -3%

North West £140,000 0% £97,000 0%England and Wales £203,500 45% £135,000 39%

Source: GLH Analysis of HM Land Registry Price Paid Data

9.12 Median house prices are influenced by the stock mix and mix of homes sold in different areas: it is

reasonable to expect higher average house prices in an area with a greater concentration of larger

properties.

9.13 Within the Liverpool HMA, the lower median house price in Liverpool is influenced in part by a

higher concentration of terraced and flatted properties (as is common in cities). In contrast, West

Lancashire sees a higher proportion of detached sales which make up more than a third of sales.

Figure 52: Mix of Properties Sold – Liverpool HMA, 2015

Detached

Semi-Detached

Terrace

Flat 0%

50%

KnowsleyLiverpoolSeftonWest LancashireWirralNorth West




9.14 Within the Mid Mersey HMA, both Halton and Warrington show an above average representation of

detached and semi-detached sales. In Halton, this is due to a particularly high proportion of new

build sales skewing the figures for detached and semi-detached sales higher. In Warrington, it

reflects the higher proportion of these house types in the Borough. St Helens has the highest

proportion of semi-detached sales.

Figure 53: Mix of Properties Sold- Mid Mersey HMA, 2015

Detached

Semi-Detached

Terrace

Flat 0%

50%

HaltonSt HelensWarringtonNorth West


9.15 The analysis highlights that above average median house prices (relative to the north west) in West

Lancashire and Warrington reflect the housing mix in these areas, which have a high proportion of

detached (and to a lesser extent semi-detached) sales in relative terms.

9.16 House price changes have also been analysed. The PPG outlines that long-term changes in house

prices may indicate an imbalance between housing supply and demand. GL Hearn have assessed

house price changes over various time periods, considering absolute and relative changes as the

PPG advises.

9.17 In considering changes in house prices it is important to recognise the impact of macro-economic

factors, and thus it is relevant to consider trends over the last five years (2010-2015) as these can

differ from longer-term trends.



9.18 Table 39 provides an analysis of absolute changes in house prices. Looking over the past 10 or 15

years, house price growth across all authorities has been below the national average. It has been

above the North West average in Sefton, Wirral and West Lancashire over a 15 year period, but not

to a substantive degree; however these authorities have seen strong recent house price growth.

Halton has seen above average house price growth relative to the North West over the past five

years.

Table 39:Absolute Changes in House Prices per Year1 Year 5 Year 10 Year 15 Year

Knowsley -£3,000 £0 -£300 £4,028Liverpool -£2,500 £200 £350 £4,337Sefton £10,700 £2,990 £1,970 £6,113Wirral £8,950 £2,790 £2,395 £6,197West Lancashire £7,974 £4,000 £2,300 £6,333

Halton £5,000 £3,004 £1,100 £4,816Warrington £0 £800 £2,000 £5,750St Helens -£792 £0 £450 £4,047

North West £3,005 £2,010 £2,000 £5,533England & Wales £12,000 £5,400 £4,700 £8,300


9.19 The rate of growth in percentage terms is shown below. Price growth over the last five or ten years

in comparative terms has been relatively weak in many areas, in all cases falling below that seen

nationally. Looking at the long-term trend over 10 or 15 years shows that it is only in Wirral that

rates of house price growth have exceeded that seen at a national or regional level.



Table 40:% Growth in House Prices per Year (CAGR)1 Year 5 Year 10 Year 15 Year

Knowsley -2.6% 0.0% -0.3% 5.3%Liverpool -2.1% 0.2% 0.3% 5.7%Sefton 7.4% 2.0% 1.4% 6.1%Wirral 6.4% 2.0% 1.8% 6.7%West Lancashire 5.1% 2.6% 1.5% 5.9%

Halton 4.2% 2.6% 0.9% 5.9%Warrington 0.0% 0.5% 1.4% 5.6%St Helens -0.7% 0.0% 0.4% 5.1%

North West 2.2% 1.5% 1.6% 6.2%England & Wales 6.2% 2.8% 2.6% 6.3%


9.20 Sales data provides information on effective demand for market housing. Figure 54 shows sales

trends benchmarked relative to average sales over the pre-recession decade (1998-2007). It

highlights that in both HMAs, sales volumes dropped dramatically between 2008-9 on the onset of

the credit crunch; and that it was not until 2013 that a substantive recovery set in. This is influenced

by macro-economic factors. Whilst sales recovered strongly during the 2013-15 period, they remain

30% below the pre-recession average in the Liverpool HMA and 26% below in the Mid Mersey HMA

relative to 24% nationally. This continues to point to effective market demand remaining below long-

term trends.

Figure 54: Sales Trends, 1997 – 2015

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

Liverpool HMAMid Mersey HMAEngland and Wales

Source: GLH Analysis of HMLR Price Paid Data / CLG Housing Statistics



9.21 The position for individual local authorities is shown below. Sales in 2015 were a substantial 28%

below pre-recession levels in West Lancashire, and 25% below in Knowsley. Only Sefton and

Warrington have shown a stronger relative recovery in sales than the position nationally. In general

there is a correlation between those authorities which have seen stronger recent house price growth

and a stronger recovery in sales. West Lancashire is however an exception to this.

Figure 55: Sales in 2015 relative to Pre-Recession Average

Wes

t Lan

cash

ire

Liverp

ool

St Hele

ns

Englan

d and

Wale

s

Sefton

-30%

-25%

-20%

-15%

-10%

-5%

0%

Source: GLH Analysis of HMLR Price Paid Data

Trends in Private Rents

9.22 Across most of the authorities in the two HMAs, private rental levels per calendar month (PCM) are

below the North West average; and in all cases rents levels are below the national average. The

exceptions are West Lancashire and Warrington, where rents are a modest £25 PCM above the

regional average (a 5% differential).

9.23 The trend in rents across much of the Liverpool HMA, and in particular in the City, has been

downwards over the period since 2001. Rental growth in nominal terms has been seen in West

Lancashire and Warrington, but it is only Warrington that has seen growth in real terms. Rental

growth where it has been seen has been below growth rates seen nationally.



Table 41:Rental Cost and Trends

Median Rent, Year to March 2016 Differential vs. NW Price Growth PA

2011-16Knowsley £525 £0 -0.8%Liverpool £450 -£75 -2.1%Sefton £525 £0 -0.8%West Lancashire £550 £25 1.0%Wirral £500 -£25 -1.1%

Halton £500 -£25 0.2%St Helens £475 -£50 0.0%Warrington £550 £25 1.7%

North West £525 £0 1.3%England £650 £125 2.8%

Source: GLH Analysis of VOA Private Rental Market Statistics

Figure 56: Rental Trends in Selected Authorities

Sep-11

Jan-1

2

May-12

Sep-12

Jan-1

3

May-13

Sep-13

Jan-1

4

May-14

Sep-14

Jan-1

5

May-15

Sep-15

Jan-1

60.90

0.95

1.00

1.05

1.10

1.15

Consumer Price IndexWarringtonWest LancashireNorth WestEnglandIn

dex

(201

1 =

1)

Source: GLH Analysis of VOA Private Rental Market Statistics

Affordability

9.24 The PPG sets out that the ratio of lower quartile house prices to lower quartile incomes can be used

to assess the affordability of housing. The ratio provides an indication of the relative ability of

younger households to be able to get on the housing ladder. It should be borne in mind that the

ratio is relatively simplistic; households’ actual ability to afford to buy will be influenced by their



ability to maintain mortgage repayments (influenced by interest rates) as well as their ability to

obtain mortgage finance, including available savings which can be put towards a deposit.

9.25 As Figure 57 indicates, the lower quartile affordability ratio in 2015 in both HMAs (and in all of their

constituent authorities) is below the national average of 7.0. Within the Liverpool HMA, the ratio is

below 5.0 in Liverpool and Knowsley, and is highest in West Lancashire at 6.9. In the Mid Mersey

HMA, the ratio is below 5.0 in both Halton and St Helens, and stands at 5.9 in Warrington.

Figure 57: Lower Quartile Affordability Ratio, 2015

Liverp

ool

Sefton

Knowsle

y

Wes

t Lan

cash

ire

Wirra

l

Liverp

ool H

MA

Halton

St Hele

ns

Warr

ington

Mid Mers

ey H

MA

Englan

d0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

LQ H

ouse

Pri

ce -

Inco

me

Rat

io

Source: CLG Housing Statistics

9.26 Table 42 analyses how the lower quartile house price to income ratio has changed, and also shows

the median ratio. Over the previous five years (2010-15), the ratio has improved in Sefton and

remained at a similar level across the other authorities and both HMAs. The ten year change points

to affordability improving marginally across both HMAs. However the fifteen year change shows a

growth in the affordability ratio across all authorities. For all periods, the affordability ratio across

England has increased at a higher rate than either of the HMAs.



Table 42:Changes in Lower Quartile Affordability Ratio

Median Ratio LQ Ratio

5 Year Change

10 Year Change

15 Year Change

Liverpool 4.64 4.21 0.4 0.3 1.9Sefton 6.14 6.12 -0.8 -0.4 2.3Knowsley 4.55 4.47 0.2 -0.6 1.4West Lancashire 6.63 6.86 0.1 -0.1 3.1Wirral 5.46 5.63 -0.3 0.5 2.6Liverpool HMA 5.49 5.46 -0.1 -0.1 2.3

Halton 4.50 4.36 0.1 -0.6 1.8St Helens 5.18 4.80 0.0 -0.2 2.1Warrington 6.12 5.87 0.4 -0.5 2.4Mid Mersey HMA 5.27 5.01 0.1 -0.4 2.1

England 7.49 7.02 0.3 0.2 3.1

Source: GLH Analysis of CLG Housing Statistics

Overcrowding

9.27 Table 43 shows the number of overcrowded households in each area. That is, households which

currently live in a property with fewer rooms than required for the members of the household. With

the exception of Liverpool, all authorities had a lower overcrowding rate than either the North West

average (6.2%) or the national average (8.5%) in 2011.

9.28 The table also shows the change in the proportion of overcrowded households since 2001. Halton,

Knowsley, and St. Helens have seen a reduction in the proportion of overcrowded households

during this period, while Sefton and West Lancashire have seen zero change. Wirral has seen a

modest growth of 0.3 percentage points (pp) while Liverpool has seen a growth of 2.1 pp. By

comparison the North West has seen a growth of 0.8 pp over this period while the UK has seen a

growth of 1.pp.

Table 43:Overcrowded HouseholdsOvercrowded Households

2011

Overcrowded Households

2011


2001


2001Change2001-11

Halton 2,638 4.9% 2,515 5.2% -0.3%Knowsley 3,642 5.9% 4,392 7.3% -1.3%Liverpool 20,032 9.7% 14,191 7.6% 2.1%Sefton 5,701 4.8% 5,593 4.8% 0.0%St Helens 3,102 4.1% 3,493 4.8% -0.7%West Lancs 1,577 3.5% 1,514 3.5% 0.0%Wirral 5,503 3.9% 4,878 3.7% 0.3%North West 187,816 6.2% 152,248 5.4% 0.8%England and Wales 1,995,860 8.5% 1,510,422 7.0% 1.6%

Source: Census 2011 and 2001



9.29 Table 44 shows the number of concealed households in each area. This shows that Knowsley

(2.20%) is the only area with a level of concealed housing above the regional (1.62%) or national

(1.84%) averages in 2011. Also shown is the percentage point change in concealed households

between 2001 and 2011. This shows the percentage point increase in all areas is lower than either

the North West (0.50%) or England and Wales (0.68%) growth over this period.

Table 44:Concealed HouseholdsConcealed

Households 2011

Concealed Households

2011

Concealed Households

2001Change2001-11

Halton 537 1.45% 1.07% 0.38%Knowsley 846 2.02% 1.56% 0.46%Liverpool 2,076 1.78% 1.34% 0.44%Sefton 1,174 1.49% 1.20% 0.29%St Helens 660 1.26% 0.99% 0.27%West Lancashire 470 1.44% 1.04% 0.41%Wirral 1,302 1.42% 0.93% 0.49%North West 32,128 1.62% 1.11% 0.50%England and Wales 289,295 1.84% 1.16% 0.68%

Source: Census 2011 and 2001

Rates of Development

9.30 Planning Practice Guidance outlines that the rate of development should be considered, with a

meaningful period used to assess housing supply. If this historic rate of development shows that

actual supply fell below planned supply, future supply should be increased to reflect the likelihood of

under-delivery of a plan.

9.31 The last recession had a particular impact on housing supply, both at a national and local level. GL

Hearn consider in this context that a meaningful period would need to include periods of both

stronger and weaker housing market conditions (based on national dynamics), and have therefore

sought to assess trends over the period since 2002. It should however be borne in mind that in the

early 2000s there was evidence of low demand and market failure in parts of the Liverpool HMA.

9.32 Moreover it is important to recognise the context through which housing targets were derived.

Historically housing targets have been set out through the Regional Spatial Strategy which sought

to promote urban renaissance, and in doing so directed growth to the re-use of brownfield land in the

urban cores within the region.

9.33 Over the period since 2002, there has been a 5% over-delivery within the Mid Mersey HMA; but a

32% under-delivery in the Liverpool HMA driven by low delivery within Knowsley, Liverpool, Sefton

and Wirral (all of which contained areas of low demand designated for housing market renewal). It

is important to note that the data in Table 45 shows net completions and is impacted by high



number of demolitions, particularly in Knowsley, Liverpool, and Sefton, resulting from the Housing

Market Renewal Initiative.

Table 45:Housing Delivery related to Targets, 2002-2015

Net Completions Housing Requirement

% Over/ Under Delivery

Liverpool 16,432 26,007 -37%Wirral 4,780 6,500 -26%Knowsley 3,144 5,630 -44%West Lancashire 3,412 3,906 -13%Sefton 5,256 6,500 -19%Liverpool HMA 33,018 48,543 -32%

St Helens 5,658 7,410 -24%Halton 4,581 6,590 -30%Warrington 10,751 6,020 79%Mid Mersey HMA 20,990 20,020 5%

Source: GLH Analysis of Annual Monitoring Reports

9.34 Figure 58 plots the housing delivery trends in each of the HMAs. The influence of the recession and

credit crunch on housing delivery between 2008-13 is self-evident. These is a clear correlation

between the trend in housing completions shown with the overall housing sales trends; which

strongly suggests that demand-side rather than supply-side factors drove the reduction in housing

delivery (given that new-build sales typically make up less than 10% of total sales).



Figure 58: Housing Delivery Trend

2002

/03

2003

/04

2004

/05

2005

/06

2006

/07

2007

/08

2008

/09

2009

/10

2010

/11

2011

/12

2012

/13

2013

/14

2014

/150

5001,0001,5002,0002,5003,0003,5004,0004,500

Liverpool HMA

Net Completions Target

2002/0

3

2003/0

4

2004/0

5

2005

/06

2006

/07

2007

/08

2008 /

09

2009 /

10

2010 /

11

2011 /

12

2012 /

13

2013 /

14

2014/1

50

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Mid Mersey HMA

Net Completions Target

Source: GLH Analysis of Annual Monitoring Reports



Affordable Housing Need

9.35 The SHELMA Report has not specifically assessed the need for affordable housing. However

affordable housing needs evidence is a consideration in drawing conclusions on the overall

objectively assessed housing need.

9.36 The need for affordable housing is dealt with separately in the PPG, with guidance provided on how

this is assessed alongside information on how needs for different types of housing should be

assessed. The Guidance states that affordable need should be calculated by “adding together the

current unmet housing need and the projected future housing need [for affordable housing] and

then subtracting this from the current supply of affordable housing stock.”20 It is important to

recognise the following with regard to assessing affordable need:

Firstly, it clearly includes existing households – the types of households identified as having a

current need include those with insecurity of tenure, overcrowded households, those lacking

facilities or with a social/physical impairment which cannot be met in situ. This includes

households across a range of tenures who are in need

Secondly, it clearly includes supply-side factors – with the estimate of need expected to be

compared against the current total affordable housing supply and committed supply of affordable

housing, and future supply taking account of relets.

20 ID 2a-022-20140306

Market Signals – Key Points

Land values across the City Region are below the national average, with only Halton exceeding the north west average. Median prices across the main towns fall below £125,000, and overall across both HMAs prices are on average a third below the national average – a significant differential.

Lower quartile (entry level) house prices are below the national average, and only significant above the North West average in West Lancashire and Warrington. Relative to incomes, lower quartile prices are below the national average in both HMAs. They are highest in West Lancashire at 6.9 in 2015.

House price growth has exceeded the regional average in the longer-term in West Lancashire, Wirral and Sefton in absolute terms; but in proportional terms only in the Wirral. Growth in all areas has fallen below the national average.

Rents are relatively low relative to national benchmarks, with no particularly high cost rental areas relative to the regional average. Rental growth since 2011 in all areas has been below regional/ national benchmarks.

Whilst there is evidence of under-delivery of housing, this is principally 2008-13, which correlates to a national slump in housing delivery influenced by macro-economic factors which saw demand fall.



9.37 This is in contrast to other parts of the methodology where supply-side factors are left aside, and

the focus is on net growth in households/ dwellings. This is an important consideration when the

assessed affordable need is compared against demographic projections.

9.38 The PPG identifies that the affordable housing need should be identified as an annual flow, and

that:

“The total affordable housing need should then be considered in the context of its likely

delivery as a proportion of mixed market and affordable housing developments, given the

probable percentage of affordable housing to be delivered by market housing led

developments. An increase in the total housing figures included in the local plan should be

considered where it could help to deliver the required number of affordable homes.”21

9.39 GL Hearn recognise that there has been some debate over the last couple of years so over whether

affordable housing need is thus a component of the OAN, or that there is a separate requirement in

setting policy to consider adjusting upwards the housing requirement to boost affordable housing

delivery. The appropriate approach has been confirmed by the High Court in Kings Lynn & West

Norfolk vs. SSCLG & Elm Park Holdings Ltd.22 In this judgement, Mr Justice Dove notes the

“ingredients” involved in assessing the full OAN, and that this necessitated considering a range of

relevant data for which there is no one set methodology and which will involve elements of

judgement. He went on to outline how the need for affordable housing should be considered in

drawing conclusions on the OAN:

“31 In terms of the first element of the assessment in the first of the sub-bullet points in

paragraph 159, namely meeting household and population projections taking account of

migration and demographic change, the PPG illustrates that this is a statistical exercise

involving a range of relevant data for which there is no one set methodology, but which will

involve elements of judgment about trends and the interpretation and application of the

empirical material available.

These judgments will arise for instance in relation to whether, for example, adjustments for

local demography or household formation rates are required (see paragraph ID 2a-014–

20140306), and the extent and nature of adjustments for market signals (see paragraph ID

2aa-018–20140306). Judgment will further be involved in taking account of economic

projections in undertaking this exercise.

32 At the second stage described by the second sub-bullet point in paragraph 159, the needs

for types and tenures of housing should be addressed. That includes the assessment of the

21 ID 2a-029-20140306 22 Kings Lynn & West Norfolk vs. SSCLG & Elm Park Holdings Ltd [2015] EWHC 2464 (Admin)



need for affordable housing as well as different forms of housing required to meet the needs

of all parts of the community. Again, the PPG provides guidance as to how this stage of the

assessment should be conducted, including in some detail how the gross unmet need for

affordable housing should be calculated. The Framework makes clear these needs should be

addressed in determining the FOAN, but neither the Framework nor the PPG suggest that

they have to be met in full when determining that FOAN. This is no doubt because in practice

very often the calculation of unmet affordable housing need will produce a figure which the

planning authority has little or no prospect of delivering in practice. That is because the vast

majority of delivery will occur as a proportion of open-market schemes and is therefore

dependent for its delivery upon market housing being developed. It is no doubt for this reason

that the PPG observes at paragraph ID 2a-208–20140306 as follows:

“The total affordable housing need should then be considered in the context of its likely

delivery as a proportion of mixed market and affordable housing developments, given the

probable percentage of affordable housing to be delivered by market housing led

developments. An increase in total housing figures included in the local plan should be

considered where it could help deliver the required number of affordable homes.”

33 This consideration of an increase to help deliver the required number of affordable homes,

rather than an instruction that the requirement be met in total, is consistent with the policy in

paragraph 159 of the Framework requiring that the SHMA “addresses” these needs in

determining the FOAN. They should have an important influence increasing the derived

FOAN since they are significant factors in providing for housing needs within an area.”

9.40 It seems clear from this that the expectation is that it may be necessary, based on the affordable

needs evidence to consider an adjustment to enhance the delivery of affordable housing, but that

this does not need to be necessarily done in a mechanical way whereby the affordable need on its

own dictates the OAN figure. Nonetheless it is clear that affordable housing need may result in

upwards adjustments to the OAN, but with consideration given to the overall deliverability of

housing.

9.41 Table 46 summarises the current affordable housing needs evidence. Specific figures should be

treated with some caution because of differences in methodological assumptions used in how they

are derived, and different dates of assessment. Figures are thus not necessarily directly

comparable.

9.42 The table provides an indication of the potential proportion of housing that could be delivered as

affordable housing. This is a broad-brush assumption which has been made for indicative purposes

only based on a review of current policy requirements. With these assumptions the analysis shows



that an uplift of 17% would be needed to meet the affordable need in the Mid Mersey HMA from the

demographic based need (but an uplift of 87% for Halton); with an uplift of 196% required for the

Liverpool HMA (with figures of 800% for West Lancashire, 463% for Knowsley and 168% for

Sefton). The affordable housing needs evidence suggests that an uplift from the demographic need

(based on the 2014-based Household Projections) would be justified in all areas besides St Helens.

9.43 Substantial uplifts are clearly unreasonable, and what must be borne in mind is that additional

households are required to occupy homes; and it is really only concealed and homeless households

which overall will be additional. Moreover any adjustments made from the demographic starting

point – either to headship rates, to address market signals or to support economic growth – will

deliver additional market and affordable housing.

Table 46:Indicative Housing provision to meet the Affordable Housing Need

Local AuthorityAffordable housing need (pa)

Potential AH

Delivery

Housing required to

meet affordable need (pa)

Source of Needs Evidence

Halton 119 25% 476 Mid Mersey SHMA January 2016, GL Hearn

Liverpool 386 (20%) (1,930) Liverpool SHMA June 2016; GL Hearn

St Helens 96 30% 320 Mid Mersey SHMA January 2016, GL Hearn

Warrington 220 25% 880 Mid Mersey SHMA January 2016, GL Hearn

Sefton 434 30% 1,447 Review of the Objectively Assessed Need for Housing, July 2015, Nathaniel Lichfield and Partners

Knowsley 315 20% 1575 Strategic Housing Market Assessment, January 2010, David Couttie Associates

West Lancashire 540 30% 1,800 West Lancashire Strategic Housing Market Assessment, May 2009, Nevin Leather Associates

Wirral 1034 40% 2,585 Wirral SHMA 2016

[Note. Liverpool does not have an affordable housing target. GLH has made a broad assumption on potential delivery through Registered Provider-led development schemes and regeneration schemes]

Implications of Housing Market Signals

9.44 Overall the analysis of market signals shows a variance in housing market dynamics, house prices,

and affordability pressures across the City Region. The price of market housing has increased over

recent years, however the evidence suggests that there has not been a corresponding worsening in

affordability in either the Liverpool HMA or Mid Mersey HMA. Compared to elsewhere in the

Country, affordability pressures in the City Region are modest.

9.45 The analysis of the housing market signals set out in this section suggests that it would be

appropriate to consider an uplift to improve affordability in Sefton, West Lancashire, and Wirral.



Conversely, the market signals show that affordability pressures are relatively less acute in the

authorities of Halton, Knowsley, Liverpool, and St Helens compared to elsewhere in the City

Region, and compared to regional or national levels.

9.46 In line with the approach outlined in the PPG it is appropriate to consider an upward adjustment to

the demographic starting point in some authorities in order to reflect the housing market signals and

to enhance affordable housing delivery. There is some debate as to whether a market signals

adjustment should be made relative to the demographic need, or whether it should be applied on

top of adjustments to support economic growth. The argument in favour of the former is that it is

intending to ‘oversupply’ housing in order to improve affordability; whilst in respect of the latter, it is

that households are required to live in additional homes and that additional housing above the

demographic starting point would potentially support additional workforce growth.

9.47 The PPG sets out that the scale of such an adjustment should be “a level that is reasonable”.

SHMAs around the country have generally applied adjustments to improve affordability of up to

20%, We are aware of only one exception to this, in Cambridge (where a 30% adjustment has been

recommended).

9.48 Over the last few years or so different Government Planning Inspectors have taken a range of views

on this matter, including:

Mendip (October 2014) – ‘these findings indicate that trends in Mendip sit fairly comfortably alongside county, regional and national trends and do not, therefore, justify an upward adjustment of the housing numbers that came out of the housing projection’

Eastleigh (November 2014) – ‘It is very difficult to judge the appropriate scale of such an uplift. I consider a cautious approach is reasonable bearing in mind that any practical benefit is likely to be very limited because Eastleigh is only a part of a much larger HMA. Exploration of an uplift of, say, 10% would be compatible with the “modest” pressure of market signals recognised in the SHMA itself’.

Uttlesford (December 2014) – ‘While evidence on some of these topics is patchy. Taking them in the round and without discussing them in detail here, I consider that an uplift of at least 10% would be a reasonable and proportionate increase in the circumstances of Uttlesford’

Stratford-on-Avon (March 2015) – Despite the area show strong evidence of strong affordability pressures the inspector concluded that ‘On balance I conclude, despite the SHMA’s finding that there is a case for an uplift, that an upward adjustment in housing numbers has not been justified in terms of market signals in the District’.

Crawley (May 2015) – Despite the Council themselves seeking to make a market signals adjustment the inspector concluded that he was ‘not convinced that the market signals uplift is justified by the evidence, for the various indicators reveal a situation in Crawley which is not as severe as in other North West Sussex authorities, and one that has not worsened in recent years’.

Cornwall (June 2015) – The same Inspector as the Eastleigh Local Plan inquiry suggested that ‘National guidance is that a worsening trend in any relevant market signal should result in an uplift. But for the reasons given below I do not consider that I should require such an uplift to be made for Cornwall at this time’



9.49 On the basis of the housing market signals considered in this section we consider that it is

appropriate to apply an affordability uplift of 10% in Sefton, West Lancashire, and Wirral. In

methodological terms we have sought to be consistent to existing SHMA studies in Sefton and

Wirral.

9.50 In considering the scale of adjustment, and the authorities to which it is applied, it should be borne

in mind that in proportional terms Sefton and Wirral see the lowest upwards adjustments from the

demographic need to support economic growth. West Lancashire sees a higher adjustment (22%)

to support economic growth, but potentially warrants an additional adjustment given that it is the

authority within the two HMAs with the highest lower quartile house price-to-income ratio and shows

very high levels of affordable housing need.



10 SPECIALIST HOUSING NEEDS

10.1 This section moves on to consider housing needs associated with a selected number of groups

within the population, or distinct market segments, where these are influenced by the demographic

analysis in this report (and therefore need to be considered to provide a consistent evidence base).

The analysis therefore focuses on assessing housing needs associated with older persons –

including specialist housing needs and registered care.

10.2 In addition, given the Government’s agenda to promote self- and custom-build development,

consideration is given to the need for this form of development as this is a gap in a number of

instances in local authorities’ existing evidence bases. An explanation is provided relating to where

evidence regarding student housing needs and needs of gypsies and travellers can be found.

10.3 The SHELMA should be read alongside local housing needs/ market assessment which provide

locally-specific evidence on the mix of housing, and affordable housing need, in different parts of

the City Region.

Older Persons’ Housing Needs

10.4 In the Liverpool City Region (as in many areas) a growing older person population is likely to have

some impact on the future need and demand for homes. The PPG (2a-021) recognises the need to

provide housing for older people as part of achieving a good mix of housing. In this section we draw

on a range of sources including our population projections, 2011 Census information and data from

POPPI (Projecting Older People Population Information).

10.5 Factors influencing the housing needs of older persons include:

A rising population of older people – which is a key influence on housing need; Many older households are equity rich and are able to exercise housing choice; An increased diversity of specialist housing to reflect different levels of care/ support needs; and

A move away from residential institutions towards providing care support in someone’s home through adaptation and visiting support.

10.6 Where projections are used to look at future changes to the older person population, the analysis

uses the 2014-based SNPP (as published). This is mainly to allow for comparative analysis across

areas (including regional and national comparisons) and it should be noted that figures would not be

expected to change substantially if a different projection were to be used – this is because the

number of older people is less variable when modelling assumptions are changed; this is due to

changes being focussed on migration, which in turn is more concentrated amongst younger age

groups (notably people of ‘working-age’ and their associated children).



Current Population of Older People

10.7 The table overleaf provides baseline population data about older persons and compared this with

other areas. The data has been taken from the published ONS mid-year population estimates and is

provided for age groups from 65 and upwards. The data shows, when compared with both the

region and England, that the study area has a similar proportion of older persons. There are

however notable differences between areas, with the population aged 65 and over being 15% in

Liverpool, and rising to 23% in Sefton.



Table 47:Older Person Population (2015)

Under 65 65-74 75-84 85+ Total Total 65+Halton Popn 104,989 12,727 6,600 2,212 126,528 21,539

% of popn

83.0% 10.1% 5.2% 1.7% 100.0% 17.0%

Knowsley Popn 122,587 12,940 8,813 2,891 147,231 24,644% of popn

83.3% 8.8% 6.0% 2.0% 100.0% 16.7%

Liverpool Popn 408,541 37,361 24,075 8,603 478,580 70,039% of popn

85.4% 7.8% 5.0% 1.8% 100.0% 14.6%

Sefton Popn 211,898 31,680 21,583 8,546 273,707 61,809% of popn

77.4% 11.6% 7.9% 3.1% 100.0% 22.6%

St Helens Popn 142,228 20,049 11,562 3,773 177,612 35,384% of popn

80.1% 11.3% 6.5% 2.1% 100.0% 19.9%

Warrington Popn 170,819 20,886 11,898 4,092 207,695 36,876% of popn

82.2% 10.1% 5.7% 2.0% 100.0% 17.8%

West Lancashire

Popn 88,932 13,306 7,724 2,780 112,742 23,810% of popn

78.9% 11.8% 6.9% 2.5% 100.0% 21.1%

Wirral Popn 253,893 36,046 21,838 9,123 320,900 67,007% of popn

79.1% 11.2% 6.8% 2.8% 100.0% 20.9%

Mid-Mersey HMA

Popn 418,036 53,662 30,060 10,077 511,835 93,799% of popn

81.7% 10.5% 5.9% 2.0% 100.0% 18.3%

Liverpool HMA

Popn 1,085,851 131,333 84,033 31,943 1,333,160 247,309% of popn

81.4% 9.9% 6.3% 2.4% 100.0% 18.6%

Study area (LCR+)

Popn 1,503,887 184,995 114,093 42,020 1,844,995 341,108% of popn

81.5% 10.0% 6.2% 2.3% 100.0% 18.5%

North West 81.9% 10.0% 5.9% 2.3% 100.0% 18.1%England 82.3% 9.6% 5.7% 2.4% 100.0% 17.7%

Source: ONS 2015 Mid-Year Population Estimates

Future Changes in the Population of Older Persons

10.8 As well as providing a baseline position for the proportion of older persons we can use population

projections to provide an indication of how the numbers might change in the future compared with

other areas. The information presented below uses data from the 2014-based SNPP and looks over

the 2012-37 period to be consistent with projections developed in this report.



10.9 The data shows that the study area (in line with other areas) is expected to see a notable increase

in the older person population with the total number of people aged 65 and over projected to

increase by 52% over the 25-years to 2037; this compares with overall population growth of 7% and

a modest decrease in the Under 65 population.

10.10 The projected growth in the population aged 65 and over is slightly lower than that projected for

other areas although differences are not substantial. When looking at individual local authorities the

data shows the strongest growth in older people to be projected to be in Warrington with the lowest

growth seen in Sefton – the differences are in part due to different levels of overall projected

population growth, as well as being influenced by the current population profile in each location.

Table 48:Projected Change in Population of Older Persons (2012 to 2037)

Under 65 65-74 75-84 85+ Total Total 65+Halton -7.7% 39.3% 85.0% 184.2% 4.3% 69.4%Knowsley -6.2% 45.0% 50.4% 125.5% 3.8% 55.7%Liverpool 5.8% 35.1% 44.8% 95.4% 11.5% 45.7%Sefton -8.3% 25.3% 44.4% 117.6% 3.1% 44.5%St Helens -3.5% 25.4% 58.1% 164.4% 6.7% 50.9%Warrington 2.7% 44.4% 83.6% 173.0% 14.1% 71.3%West Lancashire -6.4% 20.7% 56.6% 175.6% 4.7% 49.8%Wirral -7.0% 28.2% 51.5% 113.7% 3.8% 47.8%Mid-Mersey HMA -2.1% 36.1% 74.0% 172.3% 9.1% 63.1%Liverpool HMA -2.4% 30.4% 48.1% 116.0% 6.5% 47.3%Study area (LCR+) -2.3% 32.0% 54.6% 129.7% 7.2% 51.6%North West -1.1% 34.2% 58.5% 130.1% 8.5% 54.3%England 7.6% 44.5% 66.7% 137.9% 17.2% 64.4%

Source: ONS (2014-based SNPP and mid-year population estimates)

Health Related Population Projections

10.11 In addition to providing projections about how the number and proportion of older people is

expected to change in the future the analysis has looked at the likely impact on the number of

people with specific illnesses or disabilities. For this, data from the Projecting Older People

Information System (POPPI) website has been used. This provides prevalence rates for different

disabilities by age and sex. For the purposes of this report, analysis has focussed on estimates of

the number of people with dementia and mobility problems.

10.12 For both of the health issues analysed the figures relate to the population aged 65 and over. The

figures from POPPI are based on prevalence rates from a range of different sources and whilst

these might change in the future (e.g. as general health of the older person population improves)

the estimates are likely to be of the right order.



10.13 Table 49 shows that both of the illnesses/disabilities are expected to increase significantly in the

future although this would be expected given the increasing population. In particular, there is

projected to be a large rise in the number of people with dementia (up 85%) along with an 68%

increase in the number with mobility problems.

Table 49:Estimated Population Change for range of Health Issues (2012 to 2037)Type of

illness/disability2012 2037 Change % increase

Halton Dementia 1,228 2,677 1,449 118%Mobility problems 3,374 6,572 3,198 95%

Knowlsey Dementia 1,581 2,836 1,254 79%Mobility problems 4,259 7,097 2,838 67%

Liverpool Dementia 4,577 7,534 2,957 65%Mobility problems 12,206 18,889 6,683 55%

Sefton Dementia 4,256 7,510 3,254 76%Mobility problems 11,099 17,733 6,634 60%

St Helens Dementia 2,087 4,123 2,036 98%Mobility problems 5,720 9,974 4,254 74%

Warrington Dementia 2,172 4,732 2,559 118%Mobility problems 5,930 11,492 5,562 94%

West Lancashire

Dementia 1,412 2,885 1,473 104%Mobility problems 3,832 6,819 2,988 78%

Wirral Dementia 4,533 8,022 3,489 77%Mobility problems 11,795 19,168 7,372 63%

Mid-Mersey HMA


Liverpool HMA Dementia 16,359 28,787 12,428 76%Mobility problems 43,190 69,706 26,515 61%

Study area (LCR+)


Source: Data from POPPI and demographic projections



Indicative Need for Specialist Housing for Older Persons

10.14 Given the ageing population and higher levels of disability and health problems amongst older

people there is likely to be an increased requirement for specialist housing options moving forward.

The analysis in this section draws on data from the Housing Learning and Information Network

(Housing LIN) along with our demographic projections to provide an indication of the potential level

of additional specialist housing that might be required for older people in the future.

Current Stock of Specialist Housing

10.15 The table overleaf shows the current supply (stock) of specialist housing for older people. This is

split between sheltered housing (which contains two categories) and extra-care housing; analysis is

also provided of the tenure of the housing (split between market and affordable). The categories of

specialist housing are defined as:

Sheltered housing: Schemes/properties are included where some form of scheme manager (warden) service is provided on site on a regular basis but where no registered personal care is provided. A regularly visiting scheme manager service may qualify as long as s/he is available to all residents when on site. An on-call-only service does not qualify a scheme to be included in sheltered stats. In most cases schemes will also include traditional shared facilities - a residents' lounge and possibly laundry and garden.

Enhanced sheltered housing. Schemes/properties are included where service provision is higher than for sheltered housing but below extra care level. Typically, there may be 24/7 staffing cover, at least one daily meal will be provided and there may be additional shared facilities. In the table overleaf these are included within the Sheltered category.

Extra care housing: Schemes/properties are included where care (registered personal care) is available on site 24/7.

10.16 At present it is estimated that there are just over 19,700 units of specialist accommodation across

the study area; this is equivalent to 126 units per 1,000 people aged 75 and over (ranging from 79

per 1,000 in Halton up to 170 per 1,000 in West Lancashire). The analysis shows a significantly

higher proportion of the stock is in the affordable than the market sector (81% vs. 19%).



Table 50:Current Supply (Stock) of Specialist Housing for Older People

Type of Housing

Market Affordable TotalSupply per 1,000 aged

75+Halton Sheltered 48 555 603 68

Extra-Care 0 97 97 11Total 48 652 700 79

Knowsley Sheltered 146 1,013 1,159 99Extra-Care 0 179 179 15Total 146 1,192 1,338 114

Liverpool Sheltered 390 3,093 3,483 107Extra-Care 33 315 348 11Total 423 3,408 3,831 117

Sefton Sheltered 1,256 2,803 4,059 135Extra-Care 62 33 95 3Total 1,318 2,836 4,154 138

St Helens Sheltered 55 1,326 1,381 90Extra-Care 206 189 395 26Total 261 1,515 1,776 116

Warrington Sheltered 447 644 1,091 68Extra-Care 0 475 475 30Total 447 1,119 1,566 98

West Lancashire

Sheltered 158 1,518 1,676 160Extra-Care 0 111 111 11Total 158 1,629 1,787 170

Wirral Sheltered 982 3,389 4,371 141Extra-Care 0 203 203 7Total 982 3,592 4,574 148

Mid-Mersey HMA

Sheltered 550 2,525 3,075 77Extra-Care 206 761 967 24Total 756 3,286 4,042 101

Liverpool HMA Sheltered 2,932 11,816 14,748 127Extra-Care 95 841 936 8Total 3,027 12,657 15,684 135

Study area (LCR+)

Sheltered 3,482 14,341 17,823 114Extra-Care 301 1,602 1,903 12Total 3,783 15,943 19,726 126

Source: Housing LIN



Projected Future Need for Specialist Housing

10.17 A toolkit has been developed by Housing LIN, in association with the Elderly Accommodation

Council and endorsed by the Department of Health, to identify potential demand for different types

of specialist housing for older people and model future range of housing and care provision. It

suggests that there should be around 170 units of specialised accommodation (other than

registered care home places) per thousand people aged over 75 years. In projecting forward (at a

national level) the Housing LIN works on the basis of a requirement for 125 sheltered housing units

per 1,000 population, 20 enhanced sheltered units and 25 Extra-care units.

10.18 Table 51 below shows the change in the population aged 75 and over and what this would mean in

terms of provision at 170 units per 1,000 population. The analysis shows a potential need for 18,840

units – 754 per annum in the 2012-37 period. This is around 16% of the total need identified in the

demographic modelling linked to the 2014-based household projections (although the proportion

would be lower if a projection with higher household growth were to be used).

10.19 The figures provided about the number and proportion of homes that might need to be specifically

for older persons should be treated as indicative of potential need and not some sort of delivery

target. In reality, the ability for such housing to be provided will also be influenced by the ability for

this to be financed by the Councils.

Table 51:Projected need for Specialist Housing for Older People (2012-37)

Population aged 75+

(2012)

Population aged 75+

(2037)

Change in population aged 75+

Specialist housing

need (@ 170 units per

1,000)

Per annum need (2012-

37)

Halton 8,392 17,583 9,191 1,562 62Knowsley 11,414 19,087 7,673 1,304 52Liverpool 31,957 50,328 18,371 3,123 125Sefton 29,063 47,752 18,689 3,177 127St Helens 14,295 26,358 12,063 2,051 82Warrington 14,471 30,045 15,574 2,648 106West Lancashire 9,622 18,004 8,382 1,425 57Wirral 30,104 50,983 20,879 3,549 142Mid-Mersey HMA 37,158 73,986 36,828 6,261 250Liverpool HMA 112,160 186,154 73,994 12,579 503Study area (LCR+) 149,318 260,139 110,821 18,840 754

Source: Derived from demographic projections and Housing LIN



Types and Tenures of Specialist Housing

10.20 Figure 59 shows the tenure of older person households – the data has been split between single

older person households and those with two or more older people (which will largely be couples).

The data shows that older person households are relatively likely to live in outright owned

accommodation (65%) and are also slightly more likely than other households to be in the social

rented sector. The proportion of older person households living in the private rented sector is

relatively low (4% compared with 15% of all households in the study area).

10.21 There are however notable differences for different types of older person households with single

older people having a much lower level of owner-occupation than larger older person households –

this group also has a much higher proportion living in the social rented sector.

10.22 Given that the number of older people is expected to increase in the future and that the number of

single person households is expected to increase this would suggest (if occupancy patterns remain

the same) that there will be a notable demand for affordable housing from the ageing population.

That said, the proportion of older person households who are outright owners (with significant

equity) may mean that market solutions will also be required to meet their needs.

Figure 59: Tenure of Older Person Households – study area (2011)

Single older people 2 or more older persons All older person only All other households All households0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

57.5%

78.1%65.2%

20.0%29.5%

6.4%

8.0%

7.0%

40.7%33.6%

27.6%

10.1%

21.0%

20.4% 20.5%

5.5%2.8% 4.5%

18.1% 15.2%

3.0% 1.1% 2.3% 0.9% 1.2%

Owner-occupied (no mortgage) Owner-occupied (with mortgage) Social rented Private rented Other

% o

f hou

seho

lds

in g

roup

Source: 2011 Census

10.23 For individual local authorities (data in Figure 60) the tenure profile of older persons shows some

differences, although it is clear in all locations that outright ownership is the main tenure group – the

proportion of older person households who are outright owners varies from 53% in Liverpool, up to

72% in Warrington. The data shown is for all older person households (i.e. combining single person



households and those with two or more older people). Data has also been provided for the North

West region and England for comparative purposes.

Figure 60: Tenure of Older Person Households – by local authority (2011)Ha

lton

Know

sley

Liver

pool

Sefto

n

St. H

elens

War

ringt

on

Wes

t Lan

cash

ire

Wirr

al

Mid-

Mer

sey

HMA

Liver

pool

HMA

Stud

y ar

ea (L

CR+)

North

Wes

t

Engla

nd

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

61.8% 60.6%52.8%

70.7% 69.2% 72.1% 69.7% 69.1% 68.7% 64.0% 65.2% 66.9% 67.4%

6.2% 7.8%

6.1%

7.8% 5.8% 6.8% 7.4% 7.7% 6.3%7.2% 7.0% 6.2% 6.2%

27.0% 25.8%32.0%

14.4% 19.4% 16.7% 17.2% 16.2% 20.1% 21.4% 21.0% 20.2% 19.8%

2.6% 3.0% 6.4% 5.2% 2.9% 2.6% 3.1% 5.1% 2.7% 5.1% 4.5% 4.4% 4.4%2.4% 2.7% 2.6% 1.9% 2.7% 1.9% 2.6% 1.9% 2.3% 2.2% 2.3% 2.4% 2.3%

Owner-occupied (no mortgage) Owner-occupied (with mortgage) Social rented Private rented Other

% o

f hou

seho

lds in

gro

up

Source: 2011 Census

10.24 The analysis therefore shows that the current profile of older person households is significantly

biased towards outright ownership, with the current supply having a notably higher proportion of

affordable homes. Housing LIN suggests a broad tenure split of 40% rented housing (affordable

housing) and 60% in the market.23 The higher proportion in the market reflects the fact that the

majority of older person households are currently owner-occupiers (as is the case in the study

area). This general split is arguably reasonable although local considerations might mean that a

different mix is considered appropriate for individual local authorities (or HMAs).

10.25 The analysis is not specific about the types of specialist housing that might be required; decisions

about mix should be taken at a local level taking account of specific needs and the current supply of

different types of units available (for example noting that at present the dominant type of housing is

traditional sheltered accommodation). There may also be the opportunity moving forward for

different types of provision to be developed as well as the more traditional sheltered and Extra-Care

housing.

10.26 Within the different models and assumptions made regarding the future need for specialist

retirement housing (normally defined as a form of congregate housing designed exclusively for

23 See: http://www.housinglin.org.uk/_library/Resources/Housing/Support_materials/Reports/MCGVdocument.pdf


http://www.housinglin.org.uk/_library/Resources/Housing/Support_materials/Reports/MCGVdocument.pdf


older people which usually offers some form of communal space, community alarm service and

access to support and care if required), there may for example be an option to substitute some of

this specialist provision with a mix of one and two bedroomed housing aimed to attract ‘early retired’

older people which could be designated as age specific or not. Such housing could be part of the

general mix of one and two bedroom homes but built to Lifetime Homes standards in order to attract

retired older people looking to ‘down size’ but perhaps not wanting to live in specialist retirement

housing.

10.27 Our experience when carrying out stakeholder work as part of other commissions typically identifies

a demand for bungalows. Where developments including bungalows are found it is clear that these

are very popular to older people downsizing. It should be acknowledged that providing significant

numbers of bungalows involves cost implications for the developer given the typical plot size

compared to floor space – however providing an element of bungalows should be given strong

consideration on appropriate sites, allowing older households to downsize while freeing up family

accommodation for younger households.

10.28 In summary, for the purposes of analysis, a number of assumptions have been taken from Housing

LIN to estimate how much specialist provision might be needed in the future (and to some extent

what types). The analysis should however be considered as indicative and interpreted with the

following considerations:

The analysis takes no account of whether or not there is a shortfall (or surplus) of specialist housing at the base date of 2012;

Locally, the figure of 170 per 1,000 may be considered too high given that life expectancy and general health may improve in the future;

The national tenure split of 40% affordable housing may not be appropriate in all locations within the study area.

Whilst the analysis is split between sheltered, enhanced sheltered and extra-care housing in the same proportions as shown nationally, it may be the case that there will over time be a shift away from conventional sheltered housing to reflect the demand profile in the sector and a possible requirement for higher levels of care as the population ages.

Registered Care Housing

10.29 As well as the need for specialist housing for older people the analysis needs to consider

Registered Care. At present (according to Housing LIN) there are around 15,600 spaces in nursing

and residential care homes in the study area. Registered care housing is defined in two categories

as set out below:

Residential care: Where a care homes is registered to provide residential (personal) care only, all beds are allocated to residential care.

Nursing care: Where a care homes is registered to provide nursing care all beds are allocated to nursing care, although in practice not all residents might be in need of or receiving nursing care.



10.30 The current supply of registered care bedspaces is shown in Table 52 below.

Table 52:Current Supply (Stock) of Registered Care Bedspaces

Residential care Nursing careRegistered care

totalHalton 474 328 802Knowsley 446 675 1,121Liverpool 1,207 2,128 3,335Sefton 1,673 1,542 3,215St Helens 662 520 1,182Warrington 540 1,156 1,696West Lancashire 514 574 1,088Wirral 1,167 1,994 3,161Mid-Mersey HMA 1,676 2,004 3,680Liverpool HMA 5,007 6,913 11,920Study area (LCR+) 6,683 8,917 15,600

Source: Housing LIN

10.31 Given new models of provision (including Extra-care housing) it may be the case that an increase in

this number would not be required (although this would also be assuming that the Councils would

(and could) fund the care and housing related support required to operate extra care housing).

There will however need to be a recognition that there may be some additional need for particular

groups such as those requiring specialist nursing or for people with dementia.

10.32 As with the analysis of potential need for specialist accommodation, the analysis below considers

changes to the number of people aged 75 and over who are expected to be living in some form of

institutional housing. This is a direct output of the demographic modelling which indicates an

increase of 8,954 people living in institutions over the 2012-37 period (358 per annum). These

figures are important to note if the Councils intend to include C2 class uses in their assessment of

5-year housing land supply as it will be necessary to include figures on both the need and supply

side of the equation. They are modelled in a consistent way to the OAN for C3 dwellings, but are

separate from this.



Table 53:Potential Need for Residential Care HousingInstitutional population aged 75+

(2012)

Institutional population aged 75+

(2037)

Change in institutional population aged 75+

Per annum ‘need’ (2012-

37)

Halton 507 1,100 593 24Knowsley 624 1,134 510 20Liverpool 1,981 3,267 1,286 51Sefton 2,433 4,222 1,789 72St Helens 795 1,620 825 33Warrington 1,174 2,523 1,349 54West Lancashire 935 1,913 978 39Wirral 2,228 3,853 1,625 65Mid-Mersey HMA 2,476 5,243 2,767 111Liverpool HMA 8,201 14,389 6,188 248Study area (LCR+) 10,678 19,632 8,954 358

Source: Derived from demographic projections

Older Persons’ Housing Needs – Key Points

Within the overall need for housing there will potentially be a need to provide some specialist (supported) housing. This is particularly in response to an ageing population and the higher levels of disability experience by older persons.

At present the population of older people in the study area is broadly similar to that seen in other areas – some 18% of people were aged 65 and over in 2015. Over the 2012-37 period the number of people aged 65 and over is projected to increase by 52% with a higher (130%) increase in the number of people aged 85 and over.

This demographic change would be likely to see an increase in the number of people with specific disabilities (e.g. dementia and mobility problems) as well as a general increase in the numbers with a long-term health problem or disability.

The analysis identifies over the 2012-37 period that there may be a need for 754 specialist units of accommodation for older people (generally considered to be sheltered or extra-care housing) per annum. Such provision would be within a C3 use class and would therefore be part of the objective assessment of need.

Additionally, the analysis highlights a potential need for an additional 358 registered care bedspaces per annum for older people (aged 75 and over) in the 2012-37 period. As these would be in use class C2, they would be in addition to the estimates of housing need from demographic modelling.

Student Housing

10.33 Student housing needs will arise principally from growth in student numbers. The household

projections herein, and therefore the calculations of OAN derived from these, assume that all



population growth in age groups under 75 is within the ‘household population.’ The projections, in

line with the CLG Household Projections Model, assumes the population under 75 living in

institutions (which includes prisons, student halls or residence, boarding schools, nursing/ care

homes etc.) remains constant in absolute terms. This means there is no demographically projected

growth in the student population living within institutions such as halls of residence or purpose-built

student accommodation.

10.34 The main universities within the City Region are:

Liverpool Hope University Liverpool John Moores University University of Liverpool Edge Hill University

10.35 The first three above are based in Liverpool, with Edge Hill based in Ormskirk, West Lancashire. In

addition, Liverpool hosts the Liverpool Institute of Performing Arts.

10.36 Accordingly, the student needs are focussed in the authorities of Liverpool and West Lancashire.

Both authorities continually liaise with the universities to identify the need for student

accommodation at a local authority level. It is therefore not considered appropriate or necessary to

consider the need for student housing at a sub-regional level. It is recommended that student

housing needs should continue to be identified by the authorities of Liverpool and West Lancashire

through their Local Plans preparation.

Self/ Custom Build

10.37 Housing needs evidence need to investigate the contribution that self-build makes toward the local

supply. Laying the Foundations – a Housing Strategy for England 2010 sets out that only one in 10

new homes in Britain were custom built – a lower level than in other parts of Europe. It identifies

barriers to self or custom-build development24 as including:

A lack of land; Limited finance and mortgage products; Restrictive regulation; and A lack of impartial information for potential custom homebuilders.

10.38 Government aspires to make self-build a ‘mainstream housing option’ by making funding available

to support self- and custom-builders and by asking local authorities to champion the sector. Up to

£30m of funding has been made available via the Custom Build programme administered by the

HCA to provide short-term project finance to help unlock group custom build or self-build schemes.

24 Self-build is generally considered to refer to situations where a household individually organises and designs the construction of their own home. With custom-build development, a household would work with a specialist developer to design their home.



The fund can be used to cover eligible costs such as land acquisition, site preparation,

infrastructure, S106 planning obligations etc.

10.39 Local authorities are now required to establish and maintain a register of those interested in building

or commissioning their own home. This was introduced by the Self- and Custom Homebuilding Act

2015. Council registers show that there is a relatively low level of demand for custom build across

the Liverpool City Region and the two HMAs. As such this is not considered to be a strategic issue,

and therefore better addressed at a local authority level, rather than in this SHELMA.

10.40 Data on the availability of plots is held on the Buildstore website, which maintains a register of those

wishing to build a custom or self-build property as well as a register of plots available for this type of

development. As of August 2016, there are 680 people registered on the Custom Build register

within the seven local authorities. Halton has the greatest number of people on the custom build

register with 317 registrations.

Table 54:People Registered on Custom Build and Plotsearch RegistersLocal Authority Custom Build RegisterHalton 317Knowsley 70Liverpool 61Sefton 47St. Helens 74West Lancashire 24Wirral 87Total 680

Source: Buildstore, 2016

10.41 Buildstore’s registers are an online resource, registration is free and unrestricted. Accordingly, the

above data should be treated with caution and may over represent the true need for self/custom

build. For example, several of the Councils’ own self build registers contain a considerably smaller

number of records.

10.42 Table 55 provides information of the available supply of self-build locations in the City Region and

the number of plots within these locations, as recorded on the Buildstore online database25. This

shows that over half (22 out of 38) of the self-build plots in the City Region are in Wirral, at 14

locations within the Borough. There are also a small number of plots available in Liverpool (9),

Sefton (6), and a single plot in St Helens.

Table 55:Availability of Custom/Self-Build Plots (August 2016)Local Authority Town Locations Plots

25 We are also aware of a small number of self-build sites not recorded on Buildstore so the figures represent a minimum.



Liverpool Liverpool 8 9Sefton Southport 4 6St Helens St. Helens 1 1Wirral Prenton 4 5Wirral Wallasey 1 1Wirral Wirral (other) 9 16Total 27 38

Source: Buildstore, 2016

10.43 From a development point of view, key issues with this market are associated with skills and risk:

whilst there may be a notable number of people with an ‘interest’ in self-build, there is in some

circumstances a significant financial outlay, risk and time-cost associated with self-build.

10.44 We would expect most new delivery to be on small windfall sites; although there is some potential

through policy to encourage developers of larger schemes to designate parts of these as plots

available for custom build.

Gypsy and Travellers

10.45 The Department for Communities and Local Government (DCLG) published an updated planning

policy for traveller sites in August 2015. This set out how local planning authorities should make

their own assessment of need for the purposes of planning. It amends section 8 of the Housing Act

1985 to require local housing authorities to consider the needs of people residing in or resorting to

their district with respect to the provision of sites on which caravans can be stationed or places on

inland waterways where houseboats can be moored.

10.46 Assessments of Gypsy and Traveller needs have been undertaken by the Merseyside & West

Lancashire Gypsy and Traveller Accommodation Assessment (August 2014)26, and the Cheshire

Gypsy and Traveller Accommodation Assessment (March 2014) for Halton.

10.47 The need for moorings for houseboats will be individually assessed at a local authority level and

each authority should individually assess what proportion of their OAN should be met by

appropriate provision as part of their Local Plan preparation process.

11 NEED FOR OFFICE AND INDUSTRIAL LAND

11.1 In this section we consider demand for employment land and floorspace over the plan period from

2012-37. The section considers requirements for employment land in the B1, B2 and ‘small scale’

26 Knowsley Council, Liverpool Council, Sefton Council, St Helens Council, West Lancashire Borough Council, and Wirral Council.



B8 use classes. In this report we have used a definition of ‘Small Scale’ B8 to mean units under

9,000 sq m or 100,000 sq ft in size. Warehouse units larger than this are defined as ‘large scale’ B8.

Methodology

11.2 The demand for large scale B8 is considered separately from small scale B8 (and set out in Section

12). The deep water container terminal at Liverpool2, which opened in November 2016, will

increase freight throughput at the port are expected to drive increased demand for

warehouse/distribution land in the FEMA over the forecasting period (2012-37). Increased port

capacity and activity will drive increased demand for warehouse and distribution activities across

the City Region. This increased demand is likely to be predominantly for large scale warehouse

units capable of supporting regional and national operations.

11.3 However, this port related demand will to some extent be additional to past and current demand

trends and will not therefore be reflected in either the labour demand forecasting or past completion

trends traditionally used to estimate future employment land demand. Therefore, relying on either of

these traditional sources to calculate employment need will likely severely underestimate demand

for large scale B8 units. However an important component of h demand for new-build large scale

warehousing will arise from replacement of older outdated stock. Accordingly, this study uses an

alternative methodology to estimate large scale B8 demand which takes account of the need to

replace older stock and the increase in freight throughput resulting from the Liverpool2 development

and wider SuperPort concept.

11.4 The labour demand scenarios, produced by Oxford Economics and the Liverpool City Region LEP,

take the proposals at Liverpool2 into account in their Growth Scenario model. However, the labour

demand scenarios provide outputs at a sectoral level, but do not differentiate between jobs at small

scale or large scale B8 uses – this is not derivable from the model. Therefore disaggregating jobs

growth for small scale or large scale B8 from the labour demand forecasts is likely to result in a high

level of uncertainty.

11.5 Additionally, the correlation between jobs numbers and employment floorspace (i.e. the

employment density) becomes increasingly inaccurate for large scale units. For large scale

warehouse units the employment density is usually more strongly influenced by the type of

commodity being stored. Again, this means that forecasting large scale B8 need from the labour

demand forecasts is likely to result in a high level of uncertainty.

11.6 Therefore, taking the above into consideration, GL Hearn has drawn upon past completions trends

data to assess the demand for small scale B8 land.



11.7 To consider demand for office (B1a, B1b) and industrial (B1c, B2) land we have considered the

labour demand scenarios provided by Oxford Economics and the Liverpool City Region LEP as well

as past completions data.

Figure 61: Components of Employment Land Need

11.8 The analysis of ‘demand’ for employment land therefore does not take account of any supply-side

factors such as existing employment land allocations or commitments.

Labour Demand Scenarios Completions TrendB1a Labour Demand Scenarios Completions TrendB1b Labour Demand Scenarios Completions TrendB1c Labour Demand Scenarios Completions TrendB2

Completions Trend'Small scale' B8 Model based on freight throughput and replacement demand (See Section 12)'Large scale' B8

Completions TrendMargin



Labour Demand Scenario

11.9 The labour demand scenario is based on econometric forecasts produced by Oxford Economics

and Liverpool City Region LEP. Two forecasts have been considered:

Baseline Scenario; and Liverpool City Region LEP Growth Scenario.

11.10 The Baseline Scenario is based on Oxford Economics’ baseline model. The Growth Scenario is

based on additional information provided by the Liverpool City Region LEP and local authorities

inputs regarding planned/ potential development and regeneration schemes. These forecasts are

presented in more detail in Section 6 of this report. The Full-Time Equivalent (FTE) jobs growth of

each forecast is shown in the table below.

Table 56:Full-Time Equivalent (FTE) Jobs Growth, FEMA – 2012-37Baseline Scenario Growth Scenario

Halton 3,500 11,200Knowsley 8,900 11,900Liverpool 23,600 57,600Sefton 2,200 5,700St. Helens 2,700 15,800Wirral 6,600 11,500West Lancashire 5,300 6,000FEMA 52,800 119,700


11.11 GLH has estimated a labour demand based employment land needs for each of the FEMA

authorities based on the outputs of Oxford Economics’ Baseline and Growth Scenarios.

Translating Sectors to Use Classes

11.12 The Growth Scenario sets out forecast jobs growth across 96 sectors. GLH has considered the

proportion of employment in each of these sectors which is likely to take place in office (Use Class

B1a), R&D floorspace (Use Class B1b), light industrial floorspace (Use Class B1c) and general

industrial floorspace (Use Class B2). We have calibrated our standard model to relate to sectors

and use classes for the Liverpool City Region’s economy through interrogation of the composition of

employment in key sectors27. This is used to derive forecasts of net growth in FTE employment by

use class over the plan period.

11.13 To these figures we have applied standard employment densities taking account of the HCA

Employment Densities Guide: 3rd Edition (Bilfinger GVA and the Homes and Communities Agency,

2015). We have converted figures to provide employment densities for gross external floor areas on

the following basis: 27 This analysis is undertaken at 4-digit SIC level.



General Offices (B1a): The 2015 Employment Densities Guide provides a range of plot ratios for B1a uses – broken down by sub-sector. The sub-sectors are Corporate; Professional Services; Public Sector; Technology, Media, and Telecoms; Financial and Insurance; and Call Centres. These have employment ratios ranging from 8-13 sq m (NIA) per FTE employee. We have assumed that the gross external area of buildings is on average 20% higher than the net internal area;

Research and Development Offices (B1b): The 2015 Employment Densities Guide includes employment densities for research and development (B1b) uses (unlike the 2010 guide). The guide sets out that the sector can be considered to be split into two key directions; an innovation and science focussed direction which is associated with the knowledge economy and life sciences activity, and a more traditional industrial focussed direction which fits alongside manufacturing. An average of 50 sq m GEA per FTE employee has been assumed, assuming that the gross external area of buildings is on average 20% higher than the net internal area;

Light and General Industrial (B1c and B2): an average of 40 sq m GEA per employee, assumes the focus is likely to be more towards light industrial activities given small business focus of economy, assumes that the gross external area of buildings is on average 5% higher than the gross internal area.

11.14 Applying these employment densities28 to the forecasts of net growth in jobs in B-class activities, we

can derive forecasts for net changes in employment floorspace required to support the forecast

level of jobs growth.

Accounting for Manufacturing Losses

11.15 For some sectors the Growth Scenario forecasts a net loss in FTE jobs over the period 2012-37.

This is particularly the case for a number of the manufacturing sub-sectors. This raises the question

of how the losses should be treated in terms of employment land needs. The above employment

densities apply to modern developments and account for current working practices. However,

applying the modern employment densities to losses is liable to overestimate the losses of

employment land. Losses will generally be older stock which is less suitable for modern working

practices. The HCA Guide advises that in such instances care must be taken and appraisers should

adjust for the type and age of the buildings concerned and the businesses within them. Such an

approach is unsuitable for a strategic study such as this.

11.16 Furthermore, although there has been a considerable loss of jobs in the Manufacturing sector over

the last two decades, changing operating practices and increasing levels of automation has meant

that this has not necessarily translated into an equivalent loss of industrial floorspace. In other

words, the amount of floorspace required per manufacturing worker (i.e. the employment density)

has been increasing, influenced by productivity improvements. The figures below consider this

issue in greater detail for the FEMA.

28 Note: The employment densities for some of the use-classes use Gross External Area (GEA) while others use net internal area (NIA), as is set out in the HCA Guide.



11.17 Figure 62 shows the total manufacturing jobs in the FEMA since 1991 and the forecast in

manufacturing jobs to 2037. This shows a large and steady decline in manufacturing jobs

throughout the 1990s and 2000s. Over the period from 2000 to 2012 there was a 40% reduction in

manufacturing jobs. This trend has, in recent years, reversed and the forecasts show a short term

increase in jobs to 2020. The Oxford Economic forecasts show that after 2020, manufacturing jobs

are forecast to return to the long-term trend of decline.

Figure 62: Total Manufacturing Jobs – 1991-2037

1991

1994

1997

2000

2003

2006

2009

2012

2015

2018

2021

2024

2027

2030

2033

2036

0

20

40

60

80

100

120

WirralWest LancashireSt. HelensSeftonLiverpoolKnowsleyHalton

Jobs

(000

s)

Source: Oxford Economics Growth Scenario

11.18 Conversely, since 1991 the manufacturing sector’s GVA has seen steady increases to 2011. Over

the period from 2000-2011, manufacturing GVA has grown by 24%. In 2012 the data shows a one-

off blip, however the forecasts beyond this shows a continuation of the strong and consistent

growth. Clearly, the historic losses in manufacturing jobs is not translated into reduced growth in the

sector and the growth in GVA points to increased productivity in the sector.



Figure 63: Manufacturing GVA – 1991-2037

1991

1994

1997

2000

2003

2006

2009

2012

2015

2018

2021

2024

2027

2030

2033

2036

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

WirralWest LancashireSt. HelensSeftonLiverpoolKnowsleyHalton

£mill

ions

Source: Oxford Economics Growth Scenario

11.19 Figure 64 shows the total industrial floorspace over the period from 2000 to 2012. Over this period

(when there was a 40% reduction in jobs) there has been a 0.8% net increase in industrial

floorspace in the FEMA.

Figure 64: Total Industrial Floorspace – 2000-2012

20002001200220032004200520062007200820092010201120120

2,000

4,000

6,000

8,000

10,000

12,000

WirralWest LancashireSt. HelensSeftonLiverpoolKnowsleyHaltonFl

oors

pace

(sq

m)



Source: VOA

11.20 The evidence shows that historically the job losses in the manufacturing sector have not correlated

to a corresponding decrease in industrial floorspace. However, the historic trend does show growth

to GVA (economic output) indicating increased productivity within the sector. This suggests that job

losses in the sector are a result of streamlined/ more productive operating practices rather than a

reduction in activity or indeed floorspace requirements.

11.21 Furthermore, the FEMA’s historic trends in manufacturing jobs and GVA are forecast to continue

over the period to 2037. Accordingly, assuming these trends continue, it is reasonable to assume

that any forecast losses in manufacturing jobs will similarly not be translated into significant net

reductions in industrial floorspace.

11.22 On this basis, GL Hearn has forecast future industrial floorspace requirements (which principally

relate to manufacturing activities) in the labour demand scenarios based on those manufacturing

sub-sectors which are expected to see growth in employment over the forecast period (2012-37).

For industrial floorspace in particular it highlights that consideration should also be given to the

completions trend forecasts.

11.23 It should be noted that the floorspace figures shown in Figure 64 are net figures. While the overall

quantum of industrial floorspace in the FEMA has remained largely consistent over this period this

does not reflect a lack of development. Older existing stock will require updating, and some existing

sites may no longer be suitable or attractive in market terms to support manufacturing (or other

employment) uses. Local authorities should therefore continue to identify any such sites and

provide a suitable level of land to replace these losses.

Labour Demand Forecasting Results

11.24 The forecast jobs growth in the Baseline and Growth Scenarios results in the following requirement

for B1 and B2 floorspace:

Table 57:Baseline Scenario – Office and Industrial Floorspace Requirement (Sq m)B1a B1b B1c B2 Total

Halton 30,600 30,700 28,400 33,800 123,500Knowsley 55,900 20,200 40,400 61,400 177,900Liverpool 163,700 19,000 46,200 23,400 252,300Sefton 19,600 3,700 24,700 12,200 60,200St Helens 18,300 5,200 28,600 18,800 70,900Wirral 54,400 24,100 47,500 45,000 171,000West Lancashire 34,200 6,500 23,100 14,700 78,500FEMA 376,800 109,300 239,000 209,400 934,500



Table 58:Growth Scenario – Office and Industrial Floorspace Requirement (Sq m)B1a B1b B1c B2 Total

Halton 110,700 33,900 30,000 34,600 209,200Knowsley 71,500 20,400 41,200 61,800 194,900Liverpool 550,800 19,600 63,700 23,500 657,600Sefton 48,800 3,700 25,700 12,200 90,400St Helens 43,900 19,200 76,000 73,300 212,400Wirral 90,100 26,500 51,800 49,400 217,800West Lancashire 36,500 6,600 23,300 14,700 81,100FEMA 952,200 130,000 311,700 269,400 1,663,300

11.25 The figures in Tables 57 and 58 are net changes and do not take account of frictional vacancy or

replacement demand, such as from existing companies requiring upgraded floorspace. The demand

assessment is trend-based.

11.26 To calculate the land requirements to support these net changes, we have applied the following plot

ratios29. This is the ratio of gross floorspace to site area:

In Liverpool:o 1.5 for B1a/b office and R&D uses; ando 0.4 for B1c and B2 industrial uses.

In the rest of the FEMA:o 0.75 for B1a/b office and R&D uses; ando 0.4 for B1c and B2 industrial uses.

11.27 This generates the following requirement for net additional office and industrial land to support the

Baseline Scenario and the Growth Scenario:

Table 59:Baseline Scenario – Net Office and Industrial Floorspace Requirement (Ha)B1a B1b B1c B2 Total

Halton 4.3 4.1 7.1 8.4 23.9Knowsley 7.5 2.7 10.1 15.4 35.6Liverpool 11.0 1.3 11.6 5.9 29.7Sefton 2.7 0.5 6.2 3.0 12.4St Helens 2.5 0.7 7.2 4.7 15.1Wirral 7.3 3.2 11.9 11.3 33.7West Lancashire 4.6 0.9 5.8 3.7 14.9FEMA 39.9 13.3 59.7 52.3 165.3

Table 60:Growth Scenario – Net Office and Industrial Floorspace Requirement (Ha)B1a B1b B1c B2 Total

Halton 15.2 4.5 7.5 8.7 35.9Knowsley 9.6 2.7 10.3 15.4 38.1

29 Based on figures from Employment Land Reviews: Guidance Note (Report to the Office of the Deputy Prime Minister from Environmental Resources Management, December 2004).



Liverpool 36.9 1.3 15.9 5.9 60.0Sefton 6.6 0.5 6.4 3.1 16.6St Helens 6.0 2.6 19.0 18.3 45.9Wirral 12.1 3.5 12.9 12.4 41.0West Lancashire 4.9 0.9 5.8 3.7 15.3FEMA 91.4 16.0 77.9 67.4 252.7

11.28 In identifying how much land to allocate for development, we consider that it would be prudent to

include a ‘margin’ in addition to the labour demand based figures above in order to provide for some

flexibility, recognising:

Typically, there is some level of vacant floor space within functioning markets; The potential error margin associated with the forecasting process; To provide a choice of sites to facilitate competition in the property market; To provide flexibility to allow for any delays in individual sites coming forward.

11.29 GL Hearn consider that it would be appropriate to make provision for a 5-year ‘margin’ based on

past employment delivery. It is considered that it would be appropriate to use long-term trends to

calculate this, given that recent take-up may in some instances have been influenced by short-term

supply-side constraints. Where data is available, completions have been considered over the period

from 2000.

11.30 Figure 65 shows the margin for each authority based on 5 years’ completions trend data.

Completions data was recorded in terms of floorspace (sq m) and converted to land area (ha) using

consistent plot ratio assumptions as above.

Figure 65: Margin – 5 Year Completions Trend

Halton

Knowsle

y

Liver

pool

Sefto

n

St. Hele

ns

Wes

t Lan

cash

ire

Wirr

al0

5

10

15

20

25

30

35

40

45

B1 (unspecified) B1a B1b B1c B2

Hec

tare

s

Source: Local Authorities’ Monitoring Data



11.31 The total land requirement for office and industrial uses (Use Classes B1a/b/c and B2) is derived by

adding the margin to the outcomes of the Baseline and Growth Scenario forecasts. This is shown in

the table overleaf.



Table 61:Total Land Requirement for Office and Industrial Uses, 2012-37

Margin Baseline Scenario + Margin

Growth Scenario + Margin

Halton 25.1 49.0 60.9Knowsley 21.7 57.3 59.8Liverpool 39.4 69.1 99.4Sefton 7.8 20.2 24.4St Helens 10.2 25.3 56.1Wirral 23.0 56.7 64.0West Lancashire 7.3 22.2 22.6LCR 134.6 299.9 387.3

Past Completions Trends

11.32 Next an alternative forecast approach has been considered, based on projecting forward past gross

completions of employment floorspace development. The completions trend includes B1, B2, and

small scale B8 developments. Large scale B8 developments have been stripped out. As gross

completions data is used, it is not necessary to include provision for a ‘margin’ in the modelling.

11.33 The Councils have, where available, provided GL Hearn with monitoring data indicating

employment floorspace completions since 2000. This period is bisected by the ‘credit crunch’ in

2008, and is representative of a full market cycle30.

11.34 Assuming future development is consistent with historic trends, the quantum of employment land

which would be required to support future development can be extrapolated over the 25 year period

2012-37. Completions data was recorded in terms of floorspace (sq m) and converted to land area

(ha) using consistent plot ratio assumptions set out previously.

11.35 The employment land requirement based on past completions trends (excluding demand for large

scale B8 uses) is shown below. The completions data for some local authorities contained some

‘general’ or unspecified B-class uses. These have been disaggregated into B use classes on a pro

rata basis.

30 For the majority of the authorities, completions data from 2000/2001 has been used; in Liverpool completions data from 2002/03 has been used; in St. Helens completions data from 2008/09 has been used as older data does not differentiate between large scale and small scale B8 developments.



Figure 66: Employment Land Requirement Based on Completions Trend, 2012-37

Halton

Knowsle

y

Liverp

ool

Sefton

St. Hele

ns

West L

anca

shire

Wirral

0

50

100

150

200

250He

ctar

es

Source: Local Authorities’ Monitoring Data

Comparison of Labour Demand and Completions Trends Land Requirements

11.36 Table 62 provides a comparison of the employment land requirements resulting from the labour

demand scenarios and the completions trend data over the period 2012 to 2037.

11.37 The Baseline Scenario identifies the smallest requirement for both B1 and B2 land with a need at

FEMA level for 160.1ha and 139.8ha respectively. The Growth Scenario and completions trends

both identify a similar requirement for land for B1 office space at a FEMA level: 232.5ha and

235.7ha respectively. However, the distribution per local authority differs, with Halton and St Helens

in particular showing large differences between the two forecasting methods.

11.38 Conversely, the estimates for B2 industrial land requirements differ greatly. The Growth Scenario

shows a need for 154.8 ha while the completions trend shows a need for 437.3 ha at FEMA level

and is higher for every local authority. This reflects the amount of new development which is not

driven by any increase in labour demand – for example, existing companies vacating older stock

and moving into more modern premises, or expansions at existing sites to accommodate new

working practices. This is a particular issue for industrial space due to increasing automation in the

sector resulting in fewer jobs per floorspace area.

11.39 For small scale B8 the completions trends show a need for 118.2 ha. Small scale B8 need wasn’t

considered in the labour demand scenarios.



Table 62:Comparison Between Labour Demand Scenarios and Completions Trend, 2012-37

Baseline Scenario Growth Scenario Completions TrendB1 B2 B1 B2 B1 B2 Small

Scale B8Halton 28.1 20.9 39.8 21.1 63.0 62.3 26.2Knowsley 24.4 33.0 26.8 33.0 20.7 88.0 15.7Liverpool 39.7 29.4 70.0 29.4 79.2 117.8 12.7Sefton 14.2 6.1 18.4 6.1 24.2 15.0 9.5St Helens 11.6 13.7 28.8 27.3 6.3 44.8 10.3Wirral 27.6 29.1 33.8 30.1 26.1 89.0 14.5West Lancs 14.5 7.7 14.9 7.7 16.3 20.4 29.2FEMA 160.1 139.8 232.5 154.8 235.7 437.3 118.2

11.40 In identifying the overall requirements for employment land, the need for ‘Strategic B8’ (considered

in Section 12) will need to be added to the above figures. Additionally, the local authorities may wish

to consider identifying additional employment land to support commodities storage and to support

inward investment opportunities (considered in Section 13).

Need for Office and Industrial Land – Key Points

The evidence points to a need for B1 development of between 160 ha (in the baseline labour demand scenario) to 236 ha (based on past completions) across the FEMA. The Growth Scenario sits at the higher end of this range (232 ha) and in particular models significant stronger office floorspace demand in Liverpool. Delivery of this will to some degree be influenced by the availability of suitable land in/ around Liverpool City Centre, and potentially public-sector support for development.

For B2 industrial floorspace, a need for 140 – 155 ha is identified in the labour demand scenarios, and a significant 437 ha based on past completions across the FEMA. This is an assessment of gross requirements to meet modern business needs, and does not necessarily imply that poorer quality older industrial sites will meet these needs. Local employment land studies consider the quality of existing sites/ allocations.

A need for 118 ha of land across the FEMA capable of accommodating small-scale B8 warehouse/ distribution development in units of under 9,000 sq.m is identified (i.e. sites of less than c. 2.5 ha).



12 NEED FOR LARGE SCALE B8 WAREHOUSING DEVELOPMENT

12.1 This section moves on to consider demand scenarios for large-scale B8 warehouse development. A

‘large scale’ warehouse is defined as an individual unit over 9,000 square metres or approximately

100,000 square feet, this being the standard recognised definition within the commercial property

sector.

Existing Large Scale Warehouse Supply

12.2 The Valuation Office Agency (VOA) records the amount of floor space by function within individual

commercial properties across England and Wales for Business Rates purposes (non-domestic

ratings list). The full ratings list has been supplied to MDS Transmodal and subsequently compiled

into a database showing, for individual properties, their location and the amount of floor space by

function (e.g. warehousing). This database has therefore been interrogated to identify and quantify

current large scale warehouse supply in the Liverpool City Region FEMA.

12.3 Table 63 below records current large scale warehouse capacity in the Liverpool City Region by

Local Authority. Across the Liverpool City Region, a total of 84 warehouse units covering just over

1.5 million square metres can be identified. The mean size of unit is therefore around 18,300

square metres. Halton, Knowsley and St Helens accommodate just under two-thirds of the City

Region’s warehouse capacity, and the logistics space located in the SHELMA study area accounts

for a little under 30% of the total warehousing stock in the North West of England.

Table 63:Existing (2014) Large Scale Warehouse Floor Space Liverpool City Region

Floor Space (000s sq m) % of LCR Floor Space Number UnitsHalton 350 23% 19

Knowsley 403 26% 18

Liverpool 182 12% 10

Sefton 67 4% 6

St Helens 246 16% 13

West Lancashire 179 12% 8

Wirral 109 7% 10

Total 1,537 84

Floor Space (000s sq m) % of LCR Floor SpaceFEMA 1,537 28%

Rest of North West 3,996 72%

North West Total 5,533

Source: MDS Transmodal, based on VOA data



Forecast of Land Use Requirements to 2043

12.4 A forecast of future demand for new-build large scale warehousing in the Liverpool City Region has

been undertaken. The output from this exercise is an estimate of the total gross warehouse new-

build which can be expected up to 204331. Planners often consider the 'net change' in floor space,

but for warehousing the gross new-build rate is the more important figure as, in many cases, new

capacity will need to be accommodated at new sites. This is because many existing sites are

poorly located in relation to the wider road network and residential areas or the plots cannot

accommodate the larger warehouses that are usually required by the market.

12.5 The traditional approach to employment land forecasting is to relate employment levels to floor

space. More specifically, future growth in employment is related to future demand for floor

space/land. While this provides a suitable forecasting method for many land-use types (e.g. B1),

applying the same approach to the logistics sector is unreliable and ultimately produces inaccurate

results, for three main reasons:

The correlation between employment density and floor space in the logistics warehousing sector is weak. Facilities of broadly the same floor space can have widely varying employment densities, as employment levels are generally related to cargo type and site activity. For example, regional distribution centres handling food produce are very labour intensive whereas national distribution centres storing white goods will have a fairly low employment density. Also, in some parts of the logistics sector employment levels are highly seasonal in nature;

Demand for floor space is related to cargo volume and throughput; and Warehouse buildings have a much shorter economic life when compared with office or retail

property, meaning there is a continual need to renew existing but life-expired capacity.

12.6 Given this position, a different approach to forecasting future warehouse new-build is required. This

needs to take into account the fact that demand for new-build warehousing is a combination of two

factors, namely:

The requirement to continually replace existing warehouse capacity which is 'life expired' (replacement build); and

The need for additional floor space to handle long-term growth in traffic volumes (growth build).

Replacement Build

12.7 Most newly built floor space is 'like-for-like' replacement for existing warehouse stock which is 'life

expired'. This is for a number of reasons. Firstly, the useful economic life of a modern warehouse

building is around 30 years (many developers will depreciate their warehouse stock over a 25-30

year economic life), after which the building can be substantially refurbished and then re-let for a

similar use (e.g. for new occupier and cargo type) or demolished, allowing the plot to be 'recycled'

for new buildings (potentially new-build warehousing). While many older buildings may be

31 The forecast years 2033 and 2043 have been selected in order to remain consistent with the recently published Transport for the North Freight and Logistics Strategy.



physically sound (i.e. they are not physically obsolete), they can become functionally obsolete e.g.

they are unable to accommodate modern automated stock handling equipment. Essentially,

buildings reach the end of their useful economic life and are no longer suitable for their original

designed use, thereby necessitating substantial refurbishment or a direct new-build replacement for

the existing occupier.

12.8 This process consequently requires new sites to be brought forward (or new plots at existing sites),

thereby allowing occupiers to re-locate to new buildings and releasing the existing facility for

refurbishment or plot recycling. It should also be noted that this process also permits land adjacent

to or within urban areas, which in all other respects are now poorly suited for large scale warehouse

buildings (e.g. due to poor road connections, small/irregular shaped plots or housing close by) to be

released for other more appropriate uses, including both employment and non-employment uses,

such as new residential developments.

12.9 Secondly, economies of scale can be gained through merging operations based at multiple sites to

one new location. For example, 2 x 20,000 square metres warehouse operations are combined at

one new 40,000 square metres facility – the new-build rate is 40,000 square metres but the net

change will be zero on the basis that the old warehouses are demolished. The ability to operate

fewer but larger distribution centres has been facilitated by advances in modern ICT inventory

management systems which have permitted much larger warehouses to be operated more

efficiently than was previously the case.

12.10 Finally, changing market conditions, both within specific companies/sectors and in the wider

economy, means that warehouse operations might need to relocate in order to remain competitive.

Sites and locations which were originally competitive can over time become sub-optimal. For

example, occupiers who previously sourced goods from domestic suppliers (and therefore had a

Midlands/north of England location) but now predominantly import from Eastern European and

deep-sea markets may now find that a rail-linked site or port centric location is now the competitive

option. As a result, a proportion of newly built floor space is required simply to 'stand still' (i.e. will

be built anyway regardless of traffic growth).

12.11 On the basis that the useful life of a modern warehouse building is 30-35 years, up to 2033 we

could therefore expect around 50% of the existing warehouse stock in the city region to require

replacement. Likewise, up to 2043 we could therefore expect around 80% of the existing

warehouse stock in the city region to require replacement. This is shown in Table 64.



Table 64:Estimated Replacement New-Build Liverpool City Region to 2033 and 2043 (000s sq m)

2014 2033 2043Existing floor space 1,537Replacement build 768 1,229% Existing stock requiring replacement

50% 80%

Source: MDS Transmodal

12.12 This means that up to 2033 we can expect just under 0.8 million square metres of new warehouse

floor space to be built in the Liverpool City Region FEMA simply to replace existing stock i.e. the

‘replacement build’ element.

Growth Build

12.13 The growth build element has been calculated as follows:

Estimating annual cargo throughput via the existing supply of large scale warehouse capacity in the Liverpool City Region;

Forecasting future cargo throughput for 2033 and 2043, derived from traffic growth rates recently produced for the Transport for the North’s Freight and Logistics Strategy; then

Relating the growth in cargo throughput up to 2033 and 2043 to the need for additional floor space.

12.14 Based on standard conversion factors which relate floor space to cargo throughout, we estimate

that the existing supply of large scale warehouse capacity in the Liverpool City Region FEMA

handles around 28.2 million tonnes of cargo per annum. This is shown in the table below.

Table 65:Throughput via Existing Warehouse Supply Liverpool City Region


12.15 In Summer 2015, Transport for the North (TfN) commissioned the production of a Freight and

Logistics Study for the north of England. Feeding into the Government’s Northern Powerhouse

initiative, the commission was undertaken by a joint MDS Transmodal-Mott MacDonald team. The


Existing floor space (000s sq m) 1,537

Pallets per sq m 1.5

Tonnes/pallet 0.8

Floor space utilisation 85%

Stock turns per annum 18

2014Pallets in-stock at any one time (000s) 1,959

Pallets handled per annum (000s) 35,262

Tonnes lifted per annum (000s) 28,210


key aim of the study was to identify how freight and logistics can contribute to transformational

economic growth in the north of England. The finalised study was published in Summer 2016.32 This

will then inform the TfN Northern Transport Strategy.

12.16 Two sets of traffic forecasts were produced for the strategy, namely:

Do-minimum – reflecting recent underlying economic growth alongside minimal investment in transport infrastructure (nothing beyond that already committed) and no other public sector interventions; and

Do-something/ Transport for the North Strategy – reflecting the consultant’s strategy, which also reflects the results of an extensive consultation exercise with the freight and logistics industry in the north of England and the public sector. This included substantial transport infrastructure investment (e.g. up-front provision of rail freight capacity), improved connectivity to ports and a substantial growth in rail/water connected distribution facilities across the north of England, alongside other public sector interventions, such as a more favourable planning environment.

12.17 The TfN Strategy Scenario in effect captures the delivery of the Liverpool 2 deep water terminal at

the Port of Liverpool, and wider growth of port-related logistics within the City Region.

Table 66:Traffic Growth to north of England (million tonnes)2014 To north of England To Distribution Centre % to Distribution CentreRoad 229.5 103.3 45%Rail 3.6 3.6 100%Total 233.1 106.9 46%2033 Do Minimum

To north of England To Distribution Centre % to Distribution Centre

Road 260.9 117.4 45%Rail 5.6 5.6 100%Total 266.5 123.0 46%2043 Do Minimum


Road 277.6 124.9 45%Rail 6.6 6.6 100%Total 284.2 131.5 46%2033 TfN Strategy


Road 273.4 123.0 45%Rail 19.8 19.8 100%Total 293.2 142.8 49%2043 TfN Strategy


Road 292.0 131.4 45%Rail 32.5 32.5 100%Total 324.5 163.9 51%


32 http://www.transportforthenorth.com/pdfs/TfN-Freight-and-Logistics-Report.pdf


http://www.transportforthenorth.com/pdfs/TfN-Freight-and-Logistics-Report.pdf


12.18 MDS Transmodal have therefore produced two sets of land-use requirement forecasts to 2043; one

based on the ‘do-minimum’ traffic forecasts, and a further forecast reflecting the consultant’s

recommended strategy for the north of England (‘do-something’), in particular the substantial growth

in rail/water connected distribution facilities across the north of England. The ‘do-minimum’ forecast

essentially assumes that existing occupiers in the Liverpool City Region area (which are primarily

serving the North West market) will over time require new warehouse facilities (to replace life-

expired capacity and to handle long term traffic growth) located in broadly the same location. In

addition to this, the ‘do-something’ scenario reflects the north of England (and by extension the

Liverpool area) gaining warehouse market share (primarily serving a national market) due to it

becoming a more competitive location in which to locate.

12.19 The forecast percentage growth in traffic direct to a large warehouse for each forecast to 2033 and

2043 is shown below.

o Do Minimum Traffic growth to 2033: 15% Traffic growth to 2043: 23%

o TfN Strategy Traffic growth to 2033: 34% Traffic growth to 2043: 53%

12.20 The forecast percentage growth in traffic direct to a large warehouse for each forecast to 2033 and

2043 is shown below.

12.21 These growth rates were subsequently applied to the estimated annual cargo throughput via the

existing supply of large scale warehouse capacity in the Liverpool City Region. Then, using the

standard conversion factors which relate floor space to cargo throughout, the growth in throughput

to 2033 and 2043 was equated as the requirement for additional floor space i.e. the growth build

element. This is shown in Table 67.



Table 67:Estimated Requirement for Additional Floor Space (Growth Build Element)


Total Requirement for Large Scale B8 Land

12.22 By combining the ‘replacement build’ and ‘growth build’ elements, the total gross warehouse new-

build which can be expected by 2033 and 2043 can be calculated. This is shown in the table below

together with the associated land requirements (on the basis that the floor space of a warehouse

represents 40% of the total plot footprint).

Table 68:Forecast Large Scale B8 Requirement to 2033 and 2043


12.23 The calculations used in this section have considered the requirement for large scale B8 uses to

2033 and 2043 in order to align with the Transport for the North Freight and Logistics Strategy.

Table 69 shows the land requirement for large scale B8 uses to 2037 (to align with the timeframes

used elsewhere in the SHELMA) for both scenarios.


2033 Do Minimum TfN StrategyTonnes lifted per annum (000s) 32,467 37,700

Growth tonnes lifted (000s) 4,257 9,490

Additional pallets handled per annum (000s) 5,321 11,863

Additional pallets in-stock at any one time (000s) 295 659

Floor space required for growth (000s sq m) 232 517

2043 Do Minimum TfN StrategyTonnes lifted per annum (000s) 34,715 43,262

Growth tonnes lifted (000s) 6,505 15,052

Additional pallets handled per annum (000s) 8,131 18,815

Additional pallets in-stock at any one time (000s) 451 1,045

Floor space required for growth (000s sq m) 354 820

Do Minimum TFN Strategy2014 2033 2043 2014 2033 2043

Existing floor space (000s sq m) 1,537 1,537

Replacement build (000s sq m) 768 1,229 768 1,229

Growth Build (000s sq m) 232 354 517 820

Total 1,000 1,584 1,285 2,049Land Required (ha) 250 396 321 512


Table 69:Forecast Large Scale B8 Requirement to 2037 Do Minimum FTN Strategy

2037 2037Replacement build (000s sq m) 952 952Growth Build (000s sq m) 281 638Land Required (ha) 308 397

12.24 At this stage, the associated land use requirements do not reflect the amount of ‘new land’ that will

potentially need to be brought forward over time, as it has not taken into account the supply of

existing B8 land with consents or that coming forward in the planning 'pipeline'. It simply reflects the

amount of land that will be required to accommodate the forecast new build. Some of it will

obviously be available at existing plots with B8 consents, while additional land may need to be

brought forward through local plans on the basis that existing B8 site supply is less than the

forecast land requirement to 2043.

Where will Large-Scale B8 Growth occur?

12.25 At this stage GL Hearn and MDS Transmodal have not disaggregated the large scale B8 need at a

local authority level, nor do we consider it appropriate to do so. The market for large-scale

warehouse/ distribution development is sub-regional in nature, and growth at a local level is typically

supply-driven – it is influenced by the availability of land at attractive locations. This is, to a large

extent, the distribution of growth at a more local level is therefore a supply-led issue.

12.26 GL Hearn have undertaken a Strategic Sites Assessment of the potential land supply for large scale

(5+ ha) B8 development. The Strategic Sites Assessment considers the availability of land; the

suitability of sites to accommodate large-scale B8 development, including their market

attractiveness; and issues affecting the deliverability of B8 development, including infrastructure.

12.27 Consideration was given to site characteristics, including site size, available land/ plots, shape and

topography; to access to the strategic road network and rail network, labour force and public

transport connectivity, as well as local access and internal circulation (for existing sites).

Neighbouring activities were considered including local services, as well as uses which could limit

the potential for 24 hour operation. Planning status, land ownership and infrastructure requirements

were considered. Relative accessibility, as well as network capacity issues on the road and rail

networks, was also addressed.

12.28 The findings of the Strategic Sites Assessment (which focuses on land capable of accommodating

strategic B8 development) are included in a report which sits alongside this SHELMA document. It

is presented separately as it deals with supply, as opposed to need.



12.29 There are policy choices for the local authorities to make regarding additional sites to allocate to

meet the need for large-scale B8 development, and it should be borne in mind that the potential

allocation of land at Parkside Rail Freight Interchange and other Preferred Option sites in St Helens

(most of which currently fall within the Green Belt) have fed into the derivation of the Growth

Scenario. GL Hearn consider that there are to some degree therefore policy factors which have

informed the Growth Scenario which may need to be revised in time. Ultimately this principally

influences the distribution of economic growth and housing need across the FEMA rather than the

scale of need overall; but it may be necessary to review this in time.

Need for Large-Scale B8 Development – Key Points

The need for large-scale B8 development (defined as units 9000+ sq.m) has been considered, taking account of the typical replacement of existing warehouse stock in 30-35 years (replacement build) together with growth in demand arising from traffic growth through two scenarios- a ‘do minimum’ scenario which broadly follows past trends; and a scenario which aligns to the Transport for the North freight strategy which sees the North and the City Region capture a greater share of demand nationally, and takes into account the potential arising from the expansion of the Port of Liverpool and wider SuperPort proposals.

Over the period to 2037, a need for 308 ha of land for strategic B8 development is identified in the Baseline/ Do Minimum Scenario and 397 ha in the TfN Strategy Scenario. This relates to requirements for land for built warehousing development.

The market analysis undertaken points to a shortage of large sites capable of accommodating large-scale B8 development within the City Region. There is an evident need to identify additional land.

An assessment of existing sites with development potential and future candidate sites for allocation is presented in a separate report which sits alongside the SHELMA.

There are clearly policy choices to be made regarding the location of future allocations to meet this sub-regional demand, which need to take account of market factors, accessibility (including to the port, motorway network and centres of population, and workforce), site characteristics and policy/ environmental designations. A comparative assessment of options for future allocations is likely to be required, in particular to consider whether exceptional circumstances exist for green belt releases in different locations. This may affect the distribution of economic growth within the FEMA, and the housing need associated with job creation.



13 NEED FOR OTHER SPECIALIST EMPLOYMENT LAND

13.1 Sections 11 and 12 have considered the need for B1, B2 and B8 development. In this section we

provide further consideration of two specific issues:

The potential additional land requirements for commodities storage which could arise from port expansion/ freight growth; and

Whether additional employment land could be required to support major inward investments to the FEMA, and how this might be dealt with.

Land Requirement for Commodities Storage

13.2 MDS Tranmodal have reviewed land requirements for commodities storage, based on the latest

Mersey Port Masterplan (June 2011). This includes forecasts for cargo handling by the Port to 2020

and 2030 by commodity. The detailed forecast assumptions for different commodities are outlined in

Appendix D.

13.3 The Masterplan envisages growth in container cargos; in trade on the roll-on, roll-off (RoRo) ferries

to Ireland and the Isle of Man; in trade of cars (which represents a significant growth opportunity); in

animal feedstuffs and biomass; other dry goods; steel and metals; forest products (reflecting the re-

emergence of the North American market and increased Far East production); and in other bulk

liquids.

13.4 Table 70 summarises the Mersey Ports forecasts for all the listed commodities, predicting a growth

in overall tonnes to 2030 of 2.52% CAGR. This is higher than the Government forecasts, which are

1.1% CAGR over the same period. The outperformance of these forecasts is attributed to stronger

anticipated growth in the Lo-lo and Ro-Ro sectors, biomass handling, palm oil and other dry bulks.



Table 70:Mersey Ports Forecasts 2020 & 2030

Source: Peel Ports (2011)

13.5 The Mersey Ports Masterplan produces forecasts for the Mersey Ports potential land requirements,

based on the forecasts for trade throughput (as shown in Table 70 above) and then estimating

future land requirements based on key assumptions with respect to the amount of land that is

required for any particular trade or traffic. It is noted in the plan that any development related to

commodities will, through port-related activities, create further demand for land.

13.6 The Ports Masterplan concludes in identifying requirement associated with commodities of 57 ha

over the period to 2020, and a further 66 ha to 2030, totalling 123 ha. This excludes what it

identified as a requirement for port-centric warehousing as this is captured in the SHELMA

modelling of demand for B8 warehousing development. A detailed commentary on the forecasts for

individual commodities is set out in Appendix D.

13.7 In addition to this, the Ports Masterplan suggests a need for 30 ha to support development of the

off-shore wind sector, 18 ha for biomass energy, and 57 ha for processing uses linked to cargos to

2030.

13.8 Set against the requirement therefore for 228 ha of land to 2030 for these activities (together with a

need identified in the Port Masterplan for 113 ha for port-centric logistics), the Masterplan identifies

a land supply of 302 ha. There is thus a need for additional land identified of 42.5 ha in the Port



Masterplan but it should be recognises that this is to meet an element of the B8 demand identified

in the preceeding sections for port-centric logistics.

13.9 Dock Infilling is mentioned as a possible source of additional land provision. The plan states that

this has been carried out in the past at Mersey Ports. It is reported, however that all of the

remaining docks are in active use for the berthing of vessels, making this an unsustainable solution.

Another solution discussed in the plan is the use of off-site land for Port-related purposed: remote

operations. Potential areas include the Dunning Bridge Road Corridor which runs for several miles

towards the Port entrance at Seaforth. Within this corridor there are a number of potential

opportunities although these would need to be weighed in the context of other regeneration

aspirations and the implications in respect of Port-related traffic generation. Remote operations for

port-associated activities will obviously be limited to certain types of development, as many

operations will need to take place within the port area.

Inward Investment Sites

13.10 The forecast employment land requirements considered in the previous sections in this SHELMA

Report are based on projecting forward past trends and taking into account future planned or

potential development/ regeneration schemes (for example at Liverpool2). In addition to this, there

are potential opportunities to attract inward investment into the City Region from footloose firms

considering location or relocation across a national or international area of search.

Land Requirements for Commodities Storage – Key Points

The commodities forecasts presented within the Mersey Ports Masterplan identify a need for around 340 ha of land to 2030. This includes land for Port-related logistics (113 ha) which will overlap with the demand forecasts for B8 warehouse development. The TfN Strategy Scenario in particular includes an assumption of growth in warehousing at rail and water-connected sites.

The forecasts appear to be optimistic in comparison to those presented by the Government, with a 1.4% CAGR difference to 2030. However, it is worth noting that the Ports Plan will be far more detailed and ‘personal’ due to the more in depth knowledge of the local markets and the future areas for expansion within the ports market particular to the Mersey Ports.

It is also noteworthy that these forecasts require large quantities of land going forward to 2020 and 2030. Although the plan designates particular areas for development in the future, there is still a 12% gap in the overall land requirement if needs for port-related logistics are to be met in/ close to the Port, meaning that there are still 105 acres of unidentified land. This is equivalent to around 42.5 hectares. This will not however necessarily be additional to the wider modelling undertaken (in particular for strategic B8 development).

Of the sites identified in the Masterplan, it is important to stress that not all the land identified is readily available and/or deliverable without further activity, notably planning consent and in some cases acquisition.



13.11 Some, if not most, of the specific needs which might arise will be able to be met through the

‘regular’ employment land supply. However potential requirements for larger scale single occupier

sites will be less easily accommodated.

13.12 It may be prudent therefore to consider an additional supply of larger ‘shovel ready’ sites which

could be safeguarded to meet future arising inward investment opportunities. Such sites would need

to be considered additional to the employment land requirement identified in this report, and their

identification and safeguarding would be a policy decision. However, by definition, forecasting the

scale of future demand for such sites is difficult.

13.13 The West Midlands Strategic Employment Sites Study (PBA and JLL, September 2015) considers

the demand for international inward investment opportunities across the West Midlands. Several of

the report’s findings are equally applicable to the Liverpool City Region. The study suggests that the

UK’s comparative advantage against other parts of Europe lie in:

Services, including those that occupy industrial space (for example logistics/distribution) and many that do not;

Consumer products such as food; The automotive industry; Expansion at existing sites, as opposed to new standalone projects.

13.14 The study, published in September 2015, found that attracting occupiers to such sites has become

more difficult, due mainly to greater competition from other countries, the result of increasing

globalisation and the enlargement of the EU. Since publication of the Study, in June 2016 the UK

voted by referendum to leave the EU. As a result of this there is considerable uncertainty

surrounding the UK economy and as a result, many companies have delayed making decisions

regarding future expansion, relocation, or hiring, pending greater economic certainty. Greater

economic certainty relies to a large extent on the terms of the renegotiated trade agreements

between the UK and the EU and other nations. At this stage, it is too early to predict what

implications this may have on the UK or the Liverpool City Region in terms of their attractiveness for

international firms.

13.15 This notwithstanding, data from Liverpool LEP shows that they have been involved with 35

successful foreign direct investment (FDI) opportunities in the year 2015-16. This is up on 16

recorded in 2014-15; 30 recorded in 2-13-14; and 23 recorded in 2012-13. Of the recorded FDI

successes, 48% were for expansions of existing businesses in the LCR and 38% were new

investments.

13.16 Figure 67 overleaf shows the number of jobs created or retained as a result of FDIs in the LCR. The

data is broken down by sector and shows that with the City Region the manufacturing sector has

seen the greatest number of jobs arising from FDI.



Figure 67: Foreign Direct Investment Jobs by Sector

Distribution

E-Commerce

HQs

Manufacturing

Manufacturing and R&D

Research and Development (R&D)

Retail

Sales

Services

0 200 400 600 800 1,000 1,200

Jobs Created / Retained

Source: Liverpool LEP

13.17 Where foreign-owned businesses do take up large employment spaces (industrial or distribution),

their requirements seem no different from those of other ‘big box’ occupiers, and their location

decisions respond to the same factors as other businesses. The key difference is that they may

have a wider choice of location, which extends beyond national boundaries. But this does not apply

to industries that need to be close to their customers, such as most services – including logistics –

and some consumer industries.

13.18 To support potential future inward investment opportunities it may therefore be beneficial to include

provision of land (say a site or sites of 40+ hectares) which is safeguarded to support a major

inward investment at a more commercially attractive location within the City Region. Such a site

would be safeguarded to ensure a supply of land was available to accommodate a future large-

scale inward investment opportunities, should such an opportunity arise.

13.19 Such a site would need to be distinguished from the ‘regular’ employment land supply insofar as

small-scale piecemeal development would be restricted. However, this is unlikely to be possible

unless the site is under public sector ownership.

13.20 Whether an additional site or sites should be safeguarded for future investment opportunities is

therefore inherently a policy decision dependent to be made through the preparation of a City

Region Spatial Framework and/or local plans; and would be reliant on the supply of public sector



owned sites in commercially attractive locations which do not already form part of the City Region’s

employment land supply. We would recommend that consideration is given by the Councils as to

whether such sites could be safeguarded so that the City Region will be better positioned to take

advantage of any future large scale investment opportunities.

Inward Investment – Key Points

Opportunities for major inward investment do not come along often; however to capture such opportunities against competition from elsewhere in the UK and internationally, it is obviously important to have suitable ‘shovel ready’ land where development can take place. There are clearly wider considerations from costs of goods and labour to incentives, trade barriers etc.

Consideration could potentially be given to identifying a large site (40+ ha) at a prime location which could accommodate a major inward investment, however if this is to be retained for this purpose it is likely to need to be in public sector ownership.



14 DRAFT CONCLUSIONS

14.1 This report provides analysis of issues related to:

Review and identify the Housing Market Area and Functional Economic Market Area geographies;

Identify the Objectively Assessed Need (OAN) for housing over the period 2012 - 2037 across the City Region and set out an approach to distribute the City Region OAN to each of the local authorities;

Consider the scale and distribution of economic growth across the City Region, taking account of past trends and baseline forecasts; as well as committed investment projects which may influence the scale/ distribution of growth – including Superport, Atlantic Gateway, and improved rail connectivity;

Model the need for employment land across the City Region, taking account of the economic data and commercial market dynamics and the expansion of the Port of Liverpool; providing outputs on employment land needs at a local authority level where relevant based on demand-side considerations.

Housing and Functional Economic Market Areas

14.2 In advance of the preparation of the SHELMA, GL Hearn has undertaken an assessment of the

relevant Housing Market Area (HMA) and Functional Economic Market Area (FEMA) boundaries in

the Liverpool City Region. This is set out in the report Defining the Housing Market Area and

Functional Economic Market Area.

14.3 In drawing conclusions on HMA boundaries, the report assesses up-to-date data on house prices,

migration flows, and commuting flows, as well as reviewing existing studies on the subject. The

HMA analysis is focussed on the definition of HMAs at a strategic level, reflecting the sub-regional

scope of the SHELMA.

14.4 The migration and commuting patterns data indicates strong migration and commuting inter-

relationships between Knowsley and Liverpool, Liverpool and Sefton, and Liverpool and Wirral and

to Sefton and West Lancashire. There is also a strong case for the grouping of St Helens and

Halton along with Warrington. St. Helens, Halton and Warrington together have a high self-

containment rate.

14.5 The analysis broadly confirms the conclusions of the 2007 Liverpool City Region Housing Strategy

as well as the 2016 Liverpool SHMA and 2016 Mid Mersey SHMA. These identify a HMA which,

based on the best fit to local authority boundaries, comprises Liverpool, Sefton, Wirral, Knowsley

and West Lancashire – the ‘Central LCR HMA’; Halton and St. Helens form a separate HMA with

Warrington – the ‘Mid Mersey HMA’. There is a degree of overlap between these two HMAs as well

as with surrounding areas, as is the case with all HMAs.



14.6 In drawing conclusions on the FEMA boundaries the report draws on the commuting and migration

data as well as taking account of LEP geographies, travel to work and housing market areas,

administrative geographies, flows of goods, catchment areas for shopping and services, and the

transport network.

14.7 On the balance of evidence, our analysis suggests the definition of a Functional Economic Market

Area (FEMA) which covers Halton, Knowsley, Liverpool, Sefton, St Helens, West Lancashire, and

Wirral.

14.8 GL Hearn recognises that in many cases housing market and functional economic market areas are

coterminous, and that there can be practical benefits associated with aligning the two. However, in

undertaking this assessment for the LCR, GL Hearn consider that there is a strong basis for

defining non-coterminous HMAs and FEMA.

Liverpool City Region’s Economy

14.9 Across the Liverpool Functional Economic Market Area there were a total of 720,000 jobs in 2014.

The local authority with the greatest number of total jobs is Liverpool with 258,000 – equivalent to

36% of the FEMA total, and considerably more than any other single authority area. This highlights

the City’s role as an economic centre for the wider FEMA. Wirral and Sefton are the authorities with

the next highest number of jobs with 112,000 (16%) and 102,000 (14%) jobs respectively. The

remaining four local authorities all have lower numbers of jobs: 68,000 jobs (9%) in St. Helens;

67,000 jobs (9%) in Knowsley; 60,000 jobs (8%) in Halton; and 53,000 jobs (7%) in West

Lancashire.

14.10 The sectors with the largest numbers of total jobs across the FEMA are Human health and social

work (124,700 jobs) and Wholesale and retail trade (108,900 jobs). There are also considerable

number of jobs in Education (66,500 jobs) and Manufacturing (62,000). Location quotient analysis

shows the FEMA has a relatively high number of jobs in the public sector compared to North West

and UK levels. The FEMA also has a higher proportion of jobs in Transport and storage than the

regional or national figures.

14.11 Since 1991 there has been considerable growth in the number of jobs in the health and education

sectors as well as the professional and business support sectors. During this period there has seen

considerable net losses of jobs in the manufacturing and financial and insurance sectors. However,

the short term (5 year) trend shows strong growth in some manufacturing sub-sectors such as the

manufacture of motor vehicles, pharmaceuticals, plastics, and other non-metal products.

14.12 Across the FEMA, the employment rate among working age persons (aged 16 to 64) is 68%. This is

below the North West rate of 71% and the national rate of 74%. Within the FEMA, Halton has the



highest employment rate at 75%. Sefton (73%) and West Lancashire (72%) also have employment

rates marginally above the North West average. The lowest employment rates in the FEMA are in

Liverpool (61%). Whilst GL Hearn would expect some difference in employment rates between

more urban and rural areas, a comparison with LEP areas focused on metropolitan areas in the

North and Midlands points to a clear potential for higher employment rates to be supported.

14.13 GL Hearn’s analysis would suggest that there is potential for the employment rate to increase in all

of the local authorities in the City Region through increasing both the number of available jobs and

the density of employment (and before any allowance is made for pensionable age changes and

wider trends towards increased economic participation).

Future Economic Growth Potential

14.14 To estimate the future economic growth potential in the FEMA we have drawn on economic

forecasts produced by Oxford Economics and Liverpool City Region Local Enterprise Partnership

(LEP). We consider two scenarios:

A Baseline Scenario; and A Growth Scenario.

14.15 The Baseline Scenario is based on Oxford Economics’ baseline model. The Growth Scenario is

based on additional information provided by the Liverpool City Region LEP and each of the FEMA

local authorities. Liverpool City Region LEP provided Oxford Economics with a set of growth

ambitions and targets, centred on a number of sectors that have been identified as having

significant growth potential. In addition, local authority officials responsible for regeneration in each

local authority provided details on future development proposals for each respective area. The jobs

growth of the Baseline and Growth Scenarios is shown in the table below.

Table 71:Total Employment Jobs Growth – 2012-37Baseline Scenario Growth Scenario Difference


Trend-Based Demographic Projections

14.16 Demographic-based housing need essentially contains two components. Firstly, there are

population projections. ONS publishes population projections every two years (the subnational

population projections (SNPP)) as well as providing an annual estimate of population change (by



age and sex) – the mid-year population estimates (MYE). Secondly, population figures are

converted into estimates of the number of households by CLG in their household projections (again

issued every two years).

Population Projections

14.17 The latest population projections are the 2014-based Subnational Population Projections (SNPP),

published by ONS on the 29th May 2016. Subnational population projections provide estimates of

the future population of local authorities, assuming a continuation of recent local trends in fertility,

mortality and migration which are constrained to the assumptions made for the 2014-based national

population projections. The new SNPP are largely based on trends in the 2009-14 period (2008-14

for international migration trends).

14.18 GL Hearn’s interrogation of the SNPP concludes that the 2014-based SNPP is a sound population

projection in terms of the methodology employed by ONS. It is however limited by the fact that it is

based on short-term trends (i.e. trends over the past 5-6 years). The 2014-based SNPP has been

rebased to take account of the 2015 ONS Mid-Year Population Estimates, meaning it is not

necessary to project population growth 2014-15. Post 2015, this latter projection uses the birth and

death rates in the SNPP along with the actual levels of migration.

14.19 The 2014-based SNPP rebased for MYE shows that the population of the study area is projected to

increase by about 135,700 (7.4%) from 2012 to 2037. The growth rate is slightly higher in the Mid

Mersey HMA (9.0%) compared to 6.8% growth in the Liverpool HMA.

14.20 To provide a sensitivity analysis, two longer-term migration trend scenarios have been modelled,

considering trends over the 14-year period to 2015 (i.e. 2001-15) and over the past 10-years (2005-

15). Both of these figures are lower than either of the 2014- SNPP based scenarios: The 10-year

migration scenario shows that the population of the study area is projected to increase by about

116,000 (6.4%) by 2037. The 14-year migration scenario shows that the population is projected to

increase by about 104,700 (5.7%) by 2037.

14.21 As well as looking at migration, the analysis can consider the impact of Unattributable Population

Change (UPC). UPC is an adjustment made by ONS to mid-year population estimates where

Census data has suggested that population growth had either been over- or under-estimated in the

inter-Census years.

14.22 The 10-year migration scenario with UPC adjustment shows that the population of the study area is

projected to increase by about 152,200 (8.3%) by 2037, while the 14-year migration scenario with

UPC adjustment shows that the population is projected to increase by about 150,800 (8.3%) by

2037. Given the uncertainties about UPC, it is better to express any needs as a range of outputs



from no UPC adjustment to a 100% UPC allowance. Alternatively, and for the purposes of

comparison a midpoint between these figures can be considered. The midpoint of the two 10-year

based projections is population growth of 7.3% (across the LCR), whilst the 14-year projections

show a figure of 7.0%. These compare with figures in the SNPP 7.2%-7.4% depending on whether

or not the MYE is included.

14.23 On balance, the various projections all point towards a similar level of population growth across the

City Region (something in the range of 7.0%-7.4%).

Household Formation

14.24 The latest Household Projections (2014-based) were published by CLG on the 12 th July 2016. It is

evident from the analysis that household formation amongst households in their late 20s and early

30s fell slightly over the 2001-11 decade. The projections however anticipate that household

formation rates for this age group will increase moving forwards. The 2014-based household

projections also expect household formation rates amongst older age groups to fall over time. Given

improving life expectancy this looks to be reasonable.

14.25 The headship rates in the 2014-based CLG household projections should not be used uncritically.

When looking specifically at data for Liverpool City Region, it is clear that the only age group where

household formation fell between 2001-11 was for people aged 25-34. However moving forward

from 2011, the rate remains fairly flat. However, it is not clear if the changes in the rates are due to

market factors or due to the change in ethnic structure reflective of international migration.

14.26 A detailed interrogation of household formation rates suggests that for Halton and West Lancashire

there is local evidence that more positive household formation amongst those aged 25-34 and 35-

44 would be a reasonable planning assumption.

Demographic-based Housing Need

14.27 Demographic-based housing need can be calculated using the outputs in terms of housing need

using the headship rates discussed above and the full range of demographic scenarios developed.

To convert households into dwellings the data includes an uplift to take account of vacant / second

homes. This results in the projected demographic-based housing needs shown in Table 72.



Table 72:Projected housing need – range of demographic based scenarios – by local authority (all figures per annum)

2014-based SNPP

2014-based SNPP

(+MYE)

10-year migration

14-year migration

10-year migration

(+UPC)

14-year migration

(+UPC)

Halton2014-headship 234 235 237 221 386 394Adjusted headship 254 254 257 241 408 416

Knowsley 2014-headship 266 280 321 300 211 180Liverpool 2014-headship 1,680 1,739 1,338 1,429 1,955 2,184Sefton 2014-headship 534 540 509 442 458 375St. Helens 2014-headship 415 416 390 368 281 245Warrington 2014-headship 765 762 834 745 802 711West Lancashire

2014-headship 169 175 196 220 145 168Adjusted headship 193 200 221 246 170 193

Wirral 2014-headship 673 664 592 515 836 819Mid-Mersey HMA

Adjusted headship 1,434 1,432 1,480 1,354 1,490 1,372

Liverpool HMA Adjusted headship 3,346 3,423 2,981 2,932 3,630 3,751

Total Adjusted headship 4,780 4,855 4,462 4,286 5,121 5,123

14.28 Consideration of the different projections suggests that the 2014-based SNPP rebased using the

2015 MYE is the most reasonable projection of housing need. This suggests a demographic-based

need for 1,432 dwellings per annum in the Mid-Mersey HMA and for 3,423 dwellings per annum in

the Liverpool HMA.

Housing and Economic Growth

14.29 The starting point for considering what housing provision may be required to support economic

growth is the expected growth in employment using the Baseline and Growth Scenarios. This then

factors in ‘double jobbing’ (the proportion of people with more than one job) and commuting ratios in

order to identify the expected changes in the resident workforce over the 2012-37 period.

14.30 The next step is calculating the number of dwellings which would be required to support the

expected growth in the resident workforce. To consider this GL Hearn has undertaken further

analysis of the potential for improvements in employment rates. Within the two HMAs, all areas

besides Warrington have an employment rate which is below the national average. The greatest

scope for improvement in the employment rate, as identified is in Liverpool and Knowsley. The

modelling for the Growth Scenario therefore assumes improvements in the economic activity rate

over the forecast period.



14.31 Taking these factors together produces the following economic-led housing need figures:

Table 73:Projected Economic-Driven Housing Need (Dwellings per Annum, 2012-37) Baseline Scenario Growth Scenario

Halton 326 565Knowsley 271 373Liverpool 862 1,791Sefton 454 587St Helens 397 855Warrington 949 973West Lancashire 221 241Wirral 536 737Mid Mersey HMA 1,671 2,393Liverpool HMA 2,343 3,729City Region (+Warrington+West Lancs) 4,015 6,122

14.32 At a HMA level, the quantum of housing required to support the Baseline Economic Growth

Scenario would imply a need for 2,343 homes per annum across the Liverpool HMA, which is below

the trend-based (2014-based) demographic projections. In the Mid Mersey HMA the Baseline

Economic Growth Scenario would imply a need for 1,671 homes per annum, which is 17% greater

than the trend-based demographic projections for the HMA. This is modelled assuming the

commuting ratio remains constant, and the employment rate 16+ falls modestly from 60.4% to

59.7% between 2012-37.

14.33 At a local authority level, the Baseline Economic Growth Scenario points to a higher level of housing

need relative to the trend-based (2014-based) demographic projections in Halton, Warrington and

West Lancashire.

14.34 The Growth Scenario results in a higher level of housing need in both HMAs, with a need for 2,393

dpa in the Mid Mersey HMA and 3,729 dpa in the Liverpool HMA (2012-37). At a local authority

level, the Growth Scenario also results in a higher level of housing need in each authority area. This

takes account of enhanced sector performance, planned/ potential development and regeneration

projects; and assumes that half of the difference in economic participation between local authorities

and that nationally is made up over the period to 2037.

Affordability and Housing Market Signals

14.35 The SHELMA provides analysis of housing market dynamics and considering if there is a case for

adjustment to overall housing provision to improve affordability. This includes a review of land

values; house prices and sales trends; trends in the private rental sector; affordability ratios;

overcrowding; and rates of development:



Land values across the City Region are below the national average, with only Halton exceeding the north west average. Median prices across the main towns fall below £125,000, and overall across both HMAs prices are on average a third below the national average – a significant differential.

Lower quartile (entry level) house prices are below the national average, and only significant above the North West average in West Lancashire and Warrington. Relative to incomes, lower quartile prices are below the national average in both HMAs. They are highest in West Lancashire at 6.9 in 2015.

House price growth has exceeded the regional average in the longer-term in West Lancashire, Wirral and Sefton in absolute terms; but in proportional terms only in the Wirral. Growth in all areas has fallen below the national average.

Rents are relatively low relative to national benchmarks, with no particularly high cost rental areas relative to the regional average. Rental growth since 2011 in all areas has been below regional/ national benchmarks.

Whilst there is evidence of under-delivery of housing, this is principally 2008-13, which correlates to a national slump in housing delivery influenced by macro-economic factors which saw demand fall.

14.36 The SHELMA has not specifically assessed the need for affordable housing. However affordable

housing needs evidence is a consideration in drawing conclusions on the overall objectively

assessed housing need.

14.37 Based on the affordable needs evidence it is necessary to consider an adjustment to enhance the

delivery of affordable housing, but that this does not need to be necessarily done in a mechanical

way whereby the affordable need on its own dictates the OAN figure. Nonetheless it is clear that

affordable housing need may result in upwards adjustments to the OAN, but with consideration

given to the overall deliverability of housing.

14.38 The analysis concludes that substantial uplifts to the OAN figures are clearly unreasonable, and

what must be borne in mind is that additional households are required to occupy homes; and it is

really only concealed and homeless households which overall will be additional. Moreover any

adjustments made from the demographic starting point – either to headship rates, to address

market signals or to support economic growth – will deliver additional market and affordable

housing.

14.39 On the basis of the affordability and housing market it is considered that it is appropriate to apply an

affordability uplift of 10% in Sefton, West Lancashire, and Wirral.

Calculating Objectively Assessed Housing Need (OAN)

14.40 Table 74 sets out the draft conclusions on OAN at local authority and HMA level. The OAN figure

for each local authority is calculated by considering which is higher of the demographic-based

housing need figure or the economic-led housing need figures.



14.41 In Halton, Warrington, and West Lancashire the Economic Baseline suggests a higher housing

need than suggested by the demographic-based modelling. In these authorities it is appropriate

therefore to consider the housing need resulting from the Economic Baseline Scenario as the

minimum basis for calculation of OAN.

14.42 In Knowsley, Liverpool, Sefton, St Helens, and Wirral the demographic-based housing need figure

is higher than that suggested by the Economic Baseline Scenario. In these authorities it is

appropriate therefore to consider the demographic modelling as the minimum basis for calculation

of OAN.

14.43 Drawing these factors together results in the OAN for housing at a local authority and HMA level

shown in Table 74.

14.44 Also shown in Table 74 is the dwelling requirement resulting from the Economic Growth Scenario.

For all authorities this is higher than either the Economic Baseline or demographic modelling. The

Growth Scenario reflects jobs growth which could result from development projects and policies

which are expected to be implemented over the study period. For some local authorities it may be

appropriate to plan for the additional growth of the Growth Scenario. However, it is important to

recognise that this scenario represents a level of economic growth which is above trend, and in

some areas – particularly St Helens and Liverpool – it takes account of site options or potential

policy interventions.

14.45 Accordingly, the OAN figures are calculated based on the demographic based need with an uplift

where appropriate to support the economic growth shown in the Baseline Scenario. The OAN

figures shown in Table 74 should be treated as minimum figures.

14.46 The affordability evidence suggests that it is appropriate to apply an uplift in some local authority

areas to improve affordability. An affordability uplift of 10% of the demographic-based need figure

has been applied in Sefton, West Lancashire, and Wirral.



Table 74:Objectively Assessed Housing Need

Demographic Based

Need

Economic Baseline Scenario

Economic Growth

Scenario

Afford-ability Uplift

OAN

Halton Adjusted headship 254 326 565 0 326

Knowsley 2014-headship 280 271 373 0 280

Liverpool 2014-headship 1,739 862 1,791 0 1,739

Sefton 2014-headship 540 454 587 54 594

St Helens 2014-headship 416 397 855 0 416

Warrington 2014-headship 762 949 973 0 949

West Lancashire

Adjusted headship 200 221 241 20 241

Wirral 2014-headship 664 536 737 66 730

Mid Mersey HMA 1,691

Liverpool HMA 3,584

Older Persons’ Housing Needs

14.47 In the Liverpool City Region (as in many areas) a growing older person population is likely to have

some impact on the future need and demand for homes. Factors influencing the housing needs of

older persons include:

A rising population of older people – which is a key influence on housing need; Many older households are equity rich and are able to exercise housing choice; An increased diversity of specialist housing to reflect different levels of care/ support needs; and

A move away from residential institutions towards providing care support in someone’s home through adaptation and visiting support.

14.48 Future changes in the population of older persons are considered using data from the 2014-based

SNPP and looks over the 2012-37 period to be consistent with projections developed in this report.

The data shows that the study area (in line with other areas) is expected to see a notable increase

in the older person population with the total number of people aged 65 and over projected to

increase by 52% over the 25-years to 2037; this compares with overall population growth of 7% and

a modest decrease in the Under 65 population.



14.49 Given the ageing population and higher levels of disability and health problems amongst older

people there is likely to be an increased requirement for specialist housing options moving forward.

The analysis draws on data from the Housing Learning and Information Network (Housing LIN)

along with our demographic projections to provide an indication of the potential level of additional

specialist housing that might be required for older people in the future.

14.50 The analysis identifies over the 2012-37 period that there may be a need for 754 specialist units of

accommodation for older people (generally considered to be sheltered or extra-care housing) per

annum. Such provision would be within a C3 use class and would therefore be part of the objective

assessment of need.

14.51 Additionally, the analysis highlights a potential need for an additional 358 registered care

bedspaces per annum for older people (aged 75 and over) in the 2012-37 period. As these would

be in use class C2, they would be in addition to the estimates of housing need from demographic

modelling.

Need For Employment Land

14.52 The SHELMA considers demand for employment land and floorspace over the plan period from

2012-37 based on the following basis:



Figure 68: Components of Employment Land Need

14.53 The analysis of ‘demand’ for employment land therefore does not take account of any supply-side

factors such as existing employment land allocations or commitments.

Labour Demand Scenarios

14.54 The labour demand scenario estimates the land which would be required to support projected jobs

growth. This is based on econometric forecasts produced by Oxford Economics and Liverpool City

Region LEP. Two forecasts have been considered:

Baseline Scenario; and Growth Scenario.

14.55 To these figures we have applied standard employment densities and plot ratios to identify the

overall land requirements to support the net jobs growth. In identifying how much land to allocate for

development, we have included a ‘margin’ in addition to the labour demand based figures above in

order to provide for some flexibility.

14.56 An alternative forecast approach has been considered, based on projecting forward past gross

completions of employment floorspace development. The completions trend includes B1, B2, and

small scale B8 developments. Large scale B8 developments have been stripped out as these are

considered separately. The employment land requirement resulting from an extrapolation of the

past completions trend is shown below. This identifies a requirement at FEMA level for 235.7ha for

B1; 437.3ha for B2 uses; and 118.2ha for small scale B8 uses.

Labour Demand Scenarios Completions TrendB1a Labour Demand Scenarios Completions TrendB1b Labour Demand Scenarios Completions TrendB1c Labour Demand Scenarios Completions TrendB2

Completions Trend'Small scale' B8

Model based on freight throughput and replacement demand'Large scale' B8

Completions TrendMargin



14.57 These approaches identify a need for B1 development of between 160 ha (in the baseline labour

demand scenario) to 236 ha (based on past completions) across the FEMA. The Growth Scenario

sits at the higher end of this range (232 ha) and in particular models significant stronger office

floorspace demand in Liverpool. Delivery of this will to some degree be influenced by the availability

of suitable land in/ around Liverpool City Centre, and potentially public-sector support for

development.

14.58 For B2 industrial floorspace, a need for 140 – 155 ha is identified in the labour demand scenarios,

and a significant 437 ha based on past completions across the FEMA. This is an assessment of

gross requirements to meet modern business needs, and does not necessarily imply that poorer

quality older industrial sites will meet these needs. Local employment land studies consider the

quality of existing sites/ allocations.

14.59 A need for 118 ha of land across the FEMA capable of accommodating small-scale B8 warehouse/

distribution development in units of under 9,000 sq.m is identified (i.e. sites of less than c. 2.5 ha).

Table 75:Employment Land Requirements (Excluding Strategic B8) by Authority, 2012-37

Baseline Scenario Growth Scenario Completions TrendB1 B2 B1 B2 B1 B2 Small

Scale B8Halton 28.1 20.9 39.8 21.1 63.0 62.3 26.2Knowsley 24.4 33.0 26.8 33.0 20.7 88.0 15.7Liverpool 39.7 29.4 70.0 29.4 79.2 117.8 12.7Sefton 14.2 6.1 18.4 6.1 24.2 15.0 9.5St Helens 11.6 13.7 28.8 27.3 6.3 44.8 10.3Wirral 27.6 29.1 33.8 30.1 26.1 89.0 14.5West Lancs 14.5 7.7 14.9 7.7 16.3 20.4 29.2FEMA 160.1 139.8 232.5 154.8 235.7 437.3 118.2

14.60 These figures need to be treated with some caution given they build in a degree of policy

aspirations in respect of future sectoral performance and the delivery of potential strategic sites.

14.61 In addition to providing for the demand for new employment land, there will inevitably be losses of

existing employment land to other uses where existing sites are no longer suitable or commercially

attractive to support continued employment uses. Local authorities should therefore continue to

identify any such sites and provide a suitable level of land to replace these losses.

14.62 In identifying the overall requirements for employment land, the need for ‘Strategic B8’ will need to

be added to the above figures. Additionally, the local authorities may wish to consider identifying

additional employment land to support commodities storage and to support inward investment

opportunities.



Need for Large Scale B8 Warehousing Development

14.63 A ‘large scale’ warehouse is defined as an individual unit over 9,000 square metres or

approximately 100,000 square feet, this being the standard recognised definition within the

commercial property sector.

14.64 The approach to forecasting future warehouse new-build takes into account the fact that demand for

new-build warehousing is a combination of two factors, namely:

The requirement to continually replace existing warehouse capacity which is 'life expired' (replacement build); and

The need for additional floor space to handle long-term growth in traffic volumes (growth build).

14.65 For the Growth Build calculation, two sets of traffic forecasts were produced for the strategy,

namely:

Do-minimum – reflecting recent underlying economic growth alongside minimal investment in transport infrastructure (nothing beyond that already committed) and no other public sector interventions; and

Do-something/ Transport for the North Strategy – reflecting the consultant’s strategy, which also reflects the results of an extensive consultation exercise with the freight and logistics industry in the north of England and the public sector. This included substantial transport infrastructure investment (e.g. up-front provision of rail freight capacity), improved connectivity to ports and a substantial growth in rail/water connected distribution facilities across the north of England, alongside other public sector interventions, such as a more favourable planning environment.

14.66 By combining the ‘replacement build’ and ‘growth build’ elements, the total gross warehouse new-

build requirement can be calculated. This is shown in the table below together with the associated

land requirements (on the basis that the floor space of a warehouse represents 40% of the total plot

footprint).

Table 76:Forecast Large Scale B8 Requirement to 2037 Do Minimum FTN Strategy

2037 2037Replacement build (000s sq m) 952 952Growth Build (000s sq m) 281 638Land Required (ha) 308 397

Where will Large-Scale B8 Growth occur?

14.67 At this stage GL Hearn and MDS Transmodal have not disaggregated the large scale B8 need at a

local authority level, nor do we consider it appropriate to do so. The market for large-scale

warehouse/ distribution development is sub-regional in nature, and growth at a local level is typically

supply-driven – it is influenced by the availability of land at attractive locations. This is, to a large

extent, the distribution of growth at a more local level is therefore a supply-led issue.



14.68 GL Hearn have undertaken a Strategic Sites Assessment of the potential land supply for large scale

(5+ ha) B8 development. The Strategic Sites Assessment considers the availability of land; the

suitability of sites to accommodate large-scale B8 development, including their market

attractiveness; and issues affecting the deliverability of B8 development, including infrastructure.

14.69 Consideration was given to site characteristics, including site size, available land/ plots, shape and

topography; to access to the strategic road network and rail network, labour force and public

transport connectivity, as well as local access and internal circulation (for existing sites).

Neighbouring activities were considered including local services, as well as uses which could limit

the potential for 24 hour operation. Planning status, land ownership and infrastructure requirements

were considered. Relative accessibility, as well as network capacity issues on the road and rail

networks, was also addressed.

14.70 The findings of the Strategic Sites Assessment (which focuses on land capable of accommodating

strategic B8 development) are included in a report which sits alongside this SHELMA document. It

is presented separately as it deals with supply, as opposed to need.

14.71 There are policy choices for the local authorities to make regarding additional sites to allocate to

meet the need for large-scale B8 development. There are various considerations which need to

feed into this including

Need for Other Specialist Employment Land

Land Requirements for Commodities Storage

14.72 MDS Tranmodal have reviewed land requirements for commodities storage, based on the latest

Mersey Port Masterplan (June 2011). This includes forecasts for cargo handling by the Port to 2020

and 2030 by commodity.

14.73 The commodities forecasts presented within the Mersey Ports Masterplan identify a need for around

340 ha of land to 2030. This includes land for Port-related logistics (113 ha) which will overlap with

the demand forecasts for B8 warehouse development. The TfN Strategy Scenario in particular

includes an assumption of growth in warehousing at rail and water-connected sites.

14.74 The plan designates particular areas for development in the future, however there is still a 12% gap

in the overall land requirement if needs for port-related logistics are to be met in/ close to the Port,

meaning that there are still 105 acres of unidentified land. This is equivalent to around 42.5

hectares. This will not however necessarily be additional to the wider modelling undertaken (in

particular for strategic B8 development).



Inward Investment Sites

14.75 There are potential opportunities to attract inward investment into the City Region from footloose

firms considering location or relocation across a national or international area of search. Some, if

not most, of the specific needs which might arise will be able to be met through the ‘regular’

employment land supply. However potential requirements for larger scale single occupier sites will

be less easily accommodated.

14.76 Opportunities for major inward investment do not come along often; however to capture such

opportunities against competition from elsewhere in the UK and internationally, it is obviously

important to have suitable ‘shovel ready’ land where development can take place. There are clearly

wider considerations from costs of goods and labour to incentives, trade barriers etc.

14.77 Consideration could potentially be given to identifying a large site (40+ ha) at a prime location which

could accommodate a major inward investment, however if this is to be retained for this purpose it is

likely to need to be in public sector ownership.


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